Exhibit 10.7
================================================================================
SECURITY AGREEMENT
By
COLONY RIH ACQUISITIONS, INC.,
as Borrower
and
THE GUARANTORS PARTY HERETO
and
BANKERS TRUST COMPANY,
as Collateral Agent
----------------------
Dated as of April 25, 2001
================================================================================
TABLE OF CONTENTS
Page
PREAMBLE.......................................................................1
RECITALS.......................................................................1
AGREEMENT......................................................................2
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions..................................................3
SECTION 1.2 Interpretation..............................................18
SECTION 1.3 Resolution of Drafting Ambiguities..........................19
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1 Pledge; Assignment of RIH Collateral........................19
SECTION 2.2 Secured Obligations.........................................21
SECTION 2.3 Reserved....................................................21
SECTION 2.4 No Release..................................................21
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1 Delivery of Certificated Securities Collateral..............22
SECTION 3.2 Perfection of Uncertificated Securities Collateral..........22
SECTION 3.3 Financing Statements and Other Filings......................22
SECTION 3.4 Perfection in Investment Collateral and
Blocked Accounts............................................23
SECTION 3.5 Joinder of Affiliates.......................................23
SECTION 3.6 Motor Vehicles..............................................23
SECTION 3.7 Supplements; Further Assurances.............................23
SECTION 3.8 Use and Pledge of Pledged Collateral........................24
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 4.1 Payment.....................................................24
SECTION 4.2 Reserved....................................................24
SECTION 4.3 Perfection Actions..........................................24
SECTION 4.4 Limitation on Liens.........................................24
SECTION 4.5 Reserved....................................................24
SECTION 4.6 Chief Executive Office; Records; Change of Name.............25
SECTION 4.7 Location of Inventory and Equipment.........................25
SECTION 4.8 Warehouse Receipts Non-Negotiable...........................26
SECTION 4.9 Condition and Maintenance of Equipment......................26
SECTION 4.10 Corporate Names; Prior Transactions.........................26
SECTION 4.11 Reserved....................................................26
SECTION 4.12 No Violations, etc..........................................26
SECTION 4.13 Reserved....................................................26
SECTION 4.14 Reserved....................................................26
SECTION 4.15 Reserved....................................................26
SECTION 4.16 Pledged Collateral..........................................26
SECTION 4.17 Insurance; Condemnation.....................................26
SECTION 4.18 Payment of Taxes; Compliance with Laws; Contesting Liens;
Claims....................................................30
SECTION 4.19 Reserved....................................................30
SECTION 4.20 Reserved....................................................30
SECTION 4.21 Benefit to Guarantors.......................................30
ARTICLE V
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 5.1 Maintenance of Records......................................31
SECTION 5.2 Legend......................................................31
SECTION 5.3 Reserved....................................................31
SECTION 5.4 Reserved....................................................31
SECTION 5.5 Instruments.................................................31
SECTION 5.6 Payment into Lockboxes......................................31
ARTICLE VI
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 6.1 Pledge of Additional Securities Collateral..................32
SECTION 6.2 Voting Rights; Distributions; etc...........................32
SECTION 6.3 No New Securities...........................................33
SECTION 6.4 Reserved....................................................34
SECTION 6.5 Reserved....................................................34
-ii-
ARTICLE VII
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 7.1 Grant of License............................................34
SECTION 7.2 Registrations...............................................34
SECTION 7.3 Reserved....................................................34
SECTION 7.4 Reserved....................................................34
SECTION 7.5 After-Acquired Property.....................................34
SECTION 7.6 Modifications...............................................35
SECTION 7.7 Reserved....................................................35
SECTION 7.8 Litigation..................................................35
ARTICLE VIII
CERTAIN PROVISIONS CONCERNING DESIGNATED
ACCOUNTS, COLLATERAL ACCOUNT AND COLLECTION OF ACCOUNTS
SECTION 8.1 Designated Accounts.........................................36
SECTION 8.2 Collateral Account..........................................37
SECTION 8.3 Cover for Letter of Credit Liabilities......................38
SECTION 8.4 Blocked Accounts............................................38
SECTION 8.5 Restriction on Credit Balances in Deposit Accounts..........40
SECTION 8.6 Certain Limitations.........................................40
ARTICLE IX
TRANSFERS AND OTHER LIENS
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 Remedies....................................................41
SECTION 10.2 Notice of Sale..............................................43
SECTION 10.3 Waiver of Notice and Claims.................................43
SECTION 10.4 Certain Sales of Pledged Collateral.........................43
SECTION 10.5 No Waiver; Cumulative Remedies..............................45
SECTION 10.6 Certain Additional Actions Regarding Intellectual Property..45
-iii-
ARTICLE XI
APPLICATION OF PROCEEDS
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Concerning Collateral Agent.................................46
SECTION 12.2 Collateral Agent May Perform; Collateral Agent Appointed
Attorney-in-Fact..........................................47
SECTION 12.3 Expenses....................................................48
SECTION 12.4 Indemnity...................................................48
SECTION 12.5 Continuing Security Interest; Assignment; Replacement.......49
SECTION 12.6 Termination; Release........................................49
SECTION 12.7 Modification in Writing.....................................49
SECTION 12.8 Notices.....................................................50
SECTION 12.9 GOVERNING LAW...............................................50
SECTION 12.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS;
WAIVER OF JURY TRIAL......................................50
SECTION 12.11 Severability of Provisions..................................51
SECTION 12.12 Execution in Counterparts...................................51
SECTION 12.13 Limitation on Interest Payable..............................51
SECTION 12.14 Business Days...............................................51
SECTION 12.15 Relationship................................................52
SECTION 12.16 Reserved....................................................52
SECTION 12.17 No Credit for Payment of Taxes or Imposition................52
SECTION 12.18 No Claims Against Collateral Agent..........................52
SECTION 12.19 Obligations Absolute........................................52
ARTICLE XIII
COLLATERAL AGENCY
SECTION 13.1 Declaration and Acceptance of Trust.........................53
SECTION 13.2 Remedies....................................................53
SECTION 13.3 Determinations Relating to Collateral.......................54
SECTION 13.4 Nature of Secured Parties' Rights...........................54
SECTION 13.5 Acceptance of Trust.........................................54
SECTION 13.6 Exculpatory Provisions......................................55
SECTION 13.7 Delegation of Duties........................................55
SECTION 13.8 Reliance by the Collateral Agent............................55
SECTION 13.9 Resignation or Removal of the Collateral Agent..............56
SECTION 13.10 Merger of the Collateral Agent..............................57
SECTION 13.11 Appointment of Additional and Separate Collateral Agent.....57
SECTION 13.12 Releases of Collateral......................................57
-iv-
SIGNATURES
SCHEDULE 1.1(a) Initial Copyrights
SCHEDULE 1.1(b) Initial Designated Accounts
SCHEDULE 1.1(c) Initial Pledged Interests
SCHEDULE 1.1(d) Initial Pledged Shares
SCHEDULE 1.1(e) Initial Intercompany Notes
SCHEDULE 1.1(f) Initial Licenses
SCHEDULE 1.1(g) Initial Patents
SCHEDULE 1.1(h) Reserved
SCHEDULE 1.1(i) Initial Trademarks
SCHEDULE 3.3 Financing Statements and Other Necessary Filings
SCHEDULE 4.6 Locations of Pledgors
SCHEDULE 4.10 Prior Corporate Names and Transactions
SCHEDULE 4.12 Required Consents
SCHEDULE 7.3 Violations or Proceedings
SCHEDULE 8.4 Blocked Account Banks
EXHIBIT 1 Form of Issuer Acknowledgment
EXHIBIT 2 Form of Security Pledge Amendment
EXHIBIT 3 Form of Joinder Agreement
EXHIBIT 4 Form of Control Agreement
-v-
SECURITY AGREEMENT
SECURITY AGREEMENT (the "Agreement"), dated as of April 25,
2001 made by COLONY RIH ACQUISITIONS, INC., a Delaware corporation (the
"Borrower"), COLONY RIH HOLDINGS, a Delaware corporation ("Holdings"), RESORTS
INTERNATIONAL HOTEL, INC., a New Jersey corporation ("RIH"), NEW PIER OPERATING
COMPANY, INC., a New Jersey corporation ("New Pier") and EACH OF THE GUARANTORS
FROM TIME TO TIME PARTY HERETO BY EXECUTION OF A JOINDER AGREEMENT (such
guarantors together with Holdings, RIH and New Pier, collectively, the
"Guarantors"), as pledgors, assignors and debtors (the Borrower, together with
the Guarantors, in such capacities and together with any successors in such
capacities, the "Pledgors," and each, a "Pledgor"), in favor of BANKERS TRUST
COMPANY, a New York banking corporation, having an office at 130 Liberty Street,
New York, New York 10006, in its capacity as Collateral Agent (as hereinafter
defined), as pledgee, assignee and secured party and for purposes of Article
XIII hereof, by Lenders' Collateral Agent (as hereinafter defined).
R E C I T A L S :
- - - - - - - -
A. Pursuant to that certain amended and restated credit
agreement dated as of April 25, 2001, amending and restating the credit
agreement dated as of April 5, 2001 (as the same may be further amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Borrower, the Guarantors, the lenders party thereto from time to time
(the "Lenders"), Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as sole lead arranger and sole bookrunner (in such capacities and
together with its successors in such capacities, the "Lead Arranger"), The CIT
Group/Equipment Financing, Inc, as co-documentation agent and Bankers Trust
Company, as collateral agent (in such capacity and together with its successors
in such capacity, the "Lenders' Collateral Agent"), the Lenders have agreed to
make to or for the account of the Borrower certain Loans (as hereinafter
defined) and to issue certain Letters of Credit (as hereinafter defined) for the
account of the Borrower.
B. It is contemplated that one or more of the Pledgors may
enter into one or more agreements with one or more of the Lenders or their
respective Affiliates (as hereinafter defined) fixing the interest rates with
respect to the Loans under the Credit Agreement (such agreements, to the extent
same are with one or more of the Lenders or their respective Affiliates (but
excluding any such agreement if the parties thereto elect not to have such
agreement deemed a Swap Contract thereunder), collectively, the "Swap
Contracts").
C. RIH has on the date hereof issued a dividend or dividends
to the Borrower pursuant to the RIH Secured Note (as hereinafter defined).
D. The Borrower owns, directly or through its Subsidiaries (as
hereinafter defined), all of the issued and outstanding shares of each of the
Guarantors.
-2-
E. RIH has, pursuant to Section 6.01(a) of the Credit
Agreement, among other things, guaranteed (the "RIH Guarantee") the portion of
the obligations under the Credit Agreement, the other Credit Documents (as
hereinafter defined) and the Swap Contracts to the extent such obligations
constitute RIH Guaranteed Obligations (as hereinafter defined).
F. Each of Holdings and New Pier has, pursuant to Section
6.01(b) of the Credit Agreement, among other things, guaranteed (the
"Holdings/New Pier Guarantee") the portion of the obligations under the Credit
Agreement, the other Credit Documents and the Swap Contracts to the extent such
obligations constitute Holdings/New Pier Guaranteed Obligations (as hereinafter
defined).
G. Each Guarantor will receive substantial benefits from the
execution, delivery and performance of the Credit Documents and each is,
therefore, willing to enter into this Agreement.
H. Each Pledgor is the legal and/or beneficial owner of the
Pledged Collateral (as hereinafter defined) to be pledged by it hereunder.
I. It is a condition to the obligations of (i) the Lenders to
make the Loans under the Credit Agreement and (ii) any Lender to issue Letters
of Credit under the Credit Agreement or to enter into any Swap Contract that the
Pledgors execute and deliver the applicable Credit Documents, including this
Agreement.
J. The Lenders' Collateral Agent has been authorized and
directed to enter into this Agreement pursuant to the Credit Agreement.
K. The Lenders' Collateral Agent and the Borrower desire to
execute and deliver this Agreement to (i) appoint the Collateral Agent, as
collateral agent, and grant the Collateral Agent all of the rights, powers and
authority set forth herein relating to the Pledged Collateral and this Agreement
and (ii) set forth certain agreements between them in respect of their
respective rights with respect to the Pledged Collateral and this Agreement.
L. This Agreement is given by each Pledgor in favor of the
Collateral Agent for its benefit and the benefit of the other Secured Parties
(as hereinafter defined) to secure the payment and performance of all of the
Secured Obligations (as hereinafter defined).
A G R E E M E N T :
- - - - - - - - -
NOW THEREFORE, in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
-3-
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions. Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement. The following terms used in this Agreement shall have the
following meanings:
"Accounts" shall mean, with respect to each Pledgor,
collectively, (i) all "accounts," as such term is defined in the UCC and (ii)
all (A) margin accounts, futures positions, book debts and other forms of
obligations and receivables now or hereafter owned or held by or payable to such
Pledgor relating in any way to or arising from the sale or lease of goods or the
rendering of services by such Pledgor or any other party, including the right to
payment of any interest or finance charge with respect thereto, together with
all merchandise represented by any of the accounts, (B) all such merchandise
that may be reclaimed or repossessed or returned to such Pledgor, (C) all of
such Pledgor's rights as an unpaid vendor, including stoppage in transit,
reclamation, replevin and sequestration, (D) all assets pledged, assigned,
hypothecated or granted to, and all letters of credit, guarantee claims, Liens
and security interests held by such Pledgor to secure payment of any accounts
and which are delivered for or on behalf of any account debtor, (E) all
accessions to all of the foregoing described properties and interests in
properties, (F) all powers of attorney for the execution of any evidence of
indebtedness or security or other writing in connection with the foregoing and
(G) all evidence of the filing of financing statements and other statements and
the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties and certificates from
filing or other registration offices.
"Acquisition Agreement" shall have the meaning assigned to
such term in the Credit Agreement.
"Acquisition Document Rights" shall mean, with respect to each
Pledgor, collectively, all of such Pledgor's rights, title and interest in, to
and under the Acquisition Documents including, without limitation, (i) all
rights and remedies relating to monetary damages, including indemnification
rights and remedies, and claims for damages or other relief pursuant to or in
respect of the Acquisition Documents, (ii) all rights and remedies relating to
monetary damages, including indemnification rights and remedies, and claims for
monetary damages under or in respect of the agreements, documents and
instruments referred to in the Acquisition Documents or related thereto and
(iii) all proceeds, collections, recoveries and rights of subrogation with
respect to the foregoing.
"Acquisition Documents" shall mean, collectively, the
Acquisition Agreement, and all documents, agreements and other instruments then
or at any time thereafter executed and/or delivered in connection therewith or
related thereto in each case as amended, amended and restated, supplemented,
extended, renewed, replaced or otherwise modified from time to time.
"Additional Pledged Interests" shall mean, collectively, with
respect to each Pledgor, all (i) options, warrants, rights, agreements,
additional membership or partnership interests or other
-4-
interests of whatever class of any issuer of Initial Pledged Interests or any
interest in any such issuer, including, without limitation, all rights,
privileges, authority and powers of such Pledgor relating to the equity or
membership or partnership interests in any such issuer or under the Operative
Agreement of any such issuer, from time to time acquired by such Pledgor in any
manner and (ii) membership, partnership or other interests, as applicable, of
each limited liability company, partnership or other entity (other than a
corporation) hereafter acquired or formed by such Pledgor and all options,
warrants, rights, agreements, additional membership or partnership interests or
other interests of whatever class of such limited liability company, partnership
or other entity including, without limitation, all rights, privileges, authority
and powers of such Pledgor to such membership, partnership or other interests or
under the Operative Agreement of such limited liability company, partnership or
other entity from time to time acquired after the date hereof by such Pledgor in
any manner, in each case including, subject to the provisions of Section 3.2
hereof, certificates, instruments and agreements representing such additional
interests and any and all interest of such Pledgor in the entries on the books
of any financial intermediary pertaining to such additional interests including,
without limitation, each limited liability company or partnership hereafter
acquired or formed by such Pledgor (which are and shall remain at all times
until this Agreement terminates, certificated interests explicitly made a
"security" subject to the provisions of Article 8 of the UCC) and the
certificates, instruments and agreements representing such additional interests
and any and all interest of such Pledgor in the entries on the books of any
financial intermediary pertaining to such additional interests.
"Additional Pledged Shares" shall mean, collectively, with
respect to each Pledgor, all (i) options, warrants, rights, agreements,
additional shares of capital stock of whatever class of any issuer of the
Initial Pledged Shares or any interest in any such issuer including, without
limitation, all rights, privileges, authority and powers of such Pledgor
relating to the additional shares issued by any such issuer are under the
Operative Agreement of any such issuer, from time to time acquired by such
Pledgor in any manner and (ii) the issued and outstanding shares of capital
stock of each corporation hereafter acquired or formed by such Pledgor and all
options, warrants, rights, agreements or additional shares of capital stock of
whatever class of such corporation including, without limitation, all rights,
privileges, authority and powers of such Pledgor relating to such shares or
under the Operative Agreement of such corporation from time to time acquired by
such Pledgor in any manner, in each case including the certificates representing
such additional shares (which are and shall remain at all times until this
Agreement terminates, certificated shares) and any and all interest of such
Pledgor in the entries on the books of any financial intermediary pertaining to
such additional shares including, without limitation, each corporation hereafter
acquired or formed by such Pledgor (which are and shall remain at all times
until this Agreement terminates, certificated shares), including the
certificates representing such additional shares and any and all interest of
such Pledgor in the entries on the books of any financial intermediary
pertaining to such additional shares.
"Affiliate" shall have the meaning assigned to such term in
the Credit Agreement.
"Agreement" shall mean this Agreement, as amended, amended and
restated, supplemented or otherwise modified from time to time in accordance
with the provisions hereof.
-5-
"Bank Accounts" shall mean, collectively, (i) the L/C
Sub-Account, the Lockboxes, the Collection Accounts and the Lockbox
Concentration Account and all accounts and sub-accounts relating to any of the
foregoing accounts and (ii) all cash, funds, checks, notes and any instruments
from time to time on deposit in any of the accounts or sub-accounts described in
clause (i) of this definition.
"Blocked Account Agreement" shall mean each Blocked Account
Agreement entered into in accordance with the provisions of Section 8.4 of this
Agreement, in form and substance satisfactory to the Collateral Agent, in each
case, which Collateral Agent may, in its sole discretion, approve.
"Blocked Account" shall have the meaning assigned to such term
in Section 8.4(ii) hereof.
"Blocked Account Bank" shall have the meaning assigned to such
term in Section 8.4(ii) hereof.
"Borrower" shall have the meaning assigned to such term in the
Preamble hereof.
"Borrower Obligations" shall mean the obligations described in
clause (i) of the definition of "Secured Obligations."
"Business Day" shall have the meaning assigned to such term in
the Credit Agreement.
"Capital Lease Obligation" shall have the meaning assigned to
such term in the Credit Agreement.
"Cash Equivalents" shall have the meaning assigned to such
term in the Credit Agreement.
"Charges" shall mean any and all property and other taxes,
assessments and special assessments, levies, fees and all governmental charges
imposed upon or assessed against, and all claims (including, without limitation,
landlords', carriers', mechanics', workmens', repairmens', laborers',
materialmens', suppliers', and warehousemens' Liens and other claims arising by
operation of law) against, all or any portion of the Pledged Collateral.
"Chattel Paper" shall mean, collectively, with respect to each
Pledgor, all "chattel paper," as such term is defined in the UCC.
"Closing Date" shall have the meaning assigned to such term in
the Credit Agreement.
"Collateral Account" shall mean a collateral account or
sub-account established and maintained by the Collateral Agent (or a Lender that
agrees to be a collateral sub-agent for the Collat-
-6-
eral Agent) in its name as Collateral Agent for the Secured Parties in
accordance with the provisions of Section 8.2 hereof and all funds from time to
time on deposit in the Collateral Account including, without limitation, all
Cash Equivalents and all certificates and instruments from time to time
representing or evidencing such investments; all notes, certificates of deposit,
checks and other instruments from time to time hereafter delivered to or
otherwise possessed by the Collateral Agent for or on behalf of any Pledgor in
substitution for, or in addition to, any or all of the Pledged Collateral; and
all interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the items constituting Pledged Collateral.
"Collateral Agent" shall have the meaning assigned to such
term in Section 13.1 hereof.
"Collection Account" shall have the meaning assigned to such
term in Section 5.6 hereof.
"Collections" shall mean all cash, funds, checks, notes,
instruments and any other form of remittance tendered by account debtors in
payment of Accounts.
"Commitments" shall have the meaning assigned to such term in
the Credit Agreement.
"Commodities Account" shall mean "commodities account," as
such term is defined in the UCC.
"Commodities Contract" shall mean "commodities contract," as
such term is defined in the UCC.
"Commodities Intermediary" shall mean "commodities
intermediary," as such term is defined in the UCC.
"Concentration Account" shall have the meaning assigned to
such term in Section 8.4(iii) hereof.
"Contracts" shall mean, collectively, with respect to each
Pledgor, all "contracts," as such term is defined in the UCC, of such Pledgor,
and in any event, shall include, without limitation, all sale, service,
performance and equipment or property lease contracts, agreements and grants
(whether written or oral, or third party or intercompany), and any other
documents (whether written or oral) between such Pledgor and third parties, and
all assignments, amendments, restatements, supplements, extensions, renewals,
replacements or modifications thereof.
"Control Agreement" shall mean an agreement substantially in
the form annexed hereto as Exhibit 4 or such other agreement in form and
substance acceptable to Collateral Agent.
-7-
"Copyrights" shall mean, collectively, with respect to each
Pledgor, all copyrights owned by or assigned to and all copyright registrations
and applications made by such Pledgor (whether statutory or common law and
whether established or registered in the United States or any other country)
including, without limitation, the copyrights, registrations and applications
listed in Schedule 1.1(a) annexed hereto, together with any and all (i) rights
and privileges arising under applicable law with respect to such Pledgor's use
of any copyrights, (ii) reissues, renewals, continuations and extensions
thereof, (iii) income, fees, royalties, damages, claims and payments now and
hereafter due and/or payable with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) rights corresponding thereto throughout the world and (v) rights
to sue for past, present and future infringements thereof.
"Cost of Construction" shall mean the sum, so far as it
relates to the reconstructing, renewing, restoring or replacing of the Equipment
and Inventory, of (i) obligations incurred or assumed by any Pledgor or
undertaken by any tenant pursuant to the terms of any lease or license for
labor, materials and other expenses and to contractors, builders and
materialmen, (ii) the cost of contract bonds and of insurance of every kind,
nature or character that may reasonably be deemed by any Pledgor to be necessary
or appropriate during the course of construction and (iii) the expenses incurred
or assumed by any Pledgor for estimates, plans and specifications and
preliminary investigations therefor, and for supervising construction, as well
as for the performance of all other duties required by or necessary for proper
construction.
"CRDA Bonds" shall mean those certain bonds which have been
issued by The New Jersey Casino Reinvestment Development Authority identified on
Schedule 10.04 to the Credit Agreement or which may subsequently be issued by
The New Jersey Casino Reinvestment Development Authority.
"Credit Agreement" shall have the meaning assigned to such
term in Recital A hereof.
"Credit Documents" shall have the meaning assigned to such
term in the Credit Agreement.
"Creditors" shall have the meaning assigned to such term in
the Credit Agreement.
"Credit Parties" shall have the meaning assigned to such term
in the Credit Agreement.
"Debt Instrument" means each of (i) the Credit Agreement and
the Notes and any related instruments or agreements, (ii) the RIH Secured Note
and any related instruments or agreements and (iii) the notes, agreements and/or
instruments which, at any time, collectively evidence or comprise any Swap
Contract.
"Default" shall have the meaning assigned to such term in the
Credit Agreement.
-8-
"Default Rate" shall mean the rate per annum equal to the
highest rate then payable under the Credit Agreement.
"Designated Accounts" shall mean, collectively, with respect
to each Pledgor, (i) the custodial securities and commodities accounts listed in
Schedule 1.1(b) maintained by such Pledgor with a Qualified Intermediary
pursuant to a Control Agreement and (ii) such other custodial securities and
commodities accounts opened after the date hereof and maintained by such Pledgor
with a Qualified Intermediary pursuant to a Control Agreement.
"Destruction" shall mean any and all damage to, or loss or
destruction of, all or any portion of the Pledged Collateral or Mortgaged
Property.
"Distributions" shall mean, collectively, with respect to each
Pledgor, all dividends, cash, options, warrants, rights, instruments,
distributions, returns of capital or principal, income, interest, profits and
other property, interests (debt or equity) or proceeds, including as a result of
a split, revision, reclassification or other like change of the Pledged
Securities, from time to time received, receivable or otherwise distributed to
such Pledgor in respect of or in exchange for any or all of the Pledged
Securities or Intercompany Notes.
"Documents" shall mean, collectively, with respect to each
Pledgor, all "documents," as such term is defined in the UCC, of such Pledgor,
and in any event, shall include, without limitation, all receipts of such
Pledgor covering, evidencing or representing Inventory or Equipment.
"Enforcement Notice" shall have the meaning assigned to such
term in Section 13.2(b) hereof.
"Entitlement Order" shall mean "entitlement order," as such
term is defined in the UCC.
"Equipment" shall mean, collectively, with respect to each
Pledgor, all "equipment," as such term is defined in the UCC, and, in any event
shall include, without limitation, all machinery, apparatus, equipment, office
machinery, electronic data-processing equipment, computers and computer hardware
and software (whether owned or licensed), furniture, conveyors, tools,
materials, storage and handling equipment, automotive equipment, motor vehicles,
tractors, trailers and other like property, whether or not the title thereto is
governed by a certificate of title or ownership, and all other equipment of
every kind and nature owned by such Pledgor or in which such Pledgor may have
any interest (to the extent of such interest) and all modifications, renewals,
improvements, alterations, repairs, substitutions, attachments, additions,
accessions and other property now or hereafter affixed thereto or used in
connection therewith, all replacements and all parts therefor and together with
all substitutes for any of the foregoing.
"Event of Default" shall mean (i) any "Event of Default" as
such term is defined in the Credit Agreement and (ii) any event or condition
that constitutes a default or that would become, with notice or lapse of time or
both, a default under the RIH Secured Note.
-9-
"Financial Asset" shall mean, collectively, with respect to
each Pledgor, all "financial assets," as such term is defined in the UCC.
"Full Replacement Cost" shall mean the Cost of Construction to
replace the General Collateral, exclusive of depreciation.
"GAAP" shall have the meaning assigned to such term in the
Credit Agreement.
"Gaming Law" shall have the meaning assigned to such term in
the Credit Agreement.
"General Collateral" shall mean the Pledged Collateral other
than the Securities Collateral, the Investment Collateral and the Intellectual
Property Collateral.
"General Intangibles" shall mean, collectively, with respect
to each Pledgor, all "general intangibles," as such term is defined in the UCC,
of such Pledgor and, in any event shall include, without limitation, (i) all of
such Pledgor's rights, title and interest in, to and under all Contracts and
Insurance Policies, (ii) all know-how and warranties relating to any of the
Pledged Collateral or the Mortgaged Property, (iii) any and all other rights,
claims, choses-in-action and causes of action of such Pledgor against any other
Person and the benefits of any and all collateral or other security given by any
other Person in connection therewith, (iv) all guarantees, endorsements and
indemnifications on, or of, any of the Pledged Collateral or any of the
Mortgaged Property, (v) all lists, books, records, correspondence, ledgers,
print-outs, files (whether in printed form or stored electronically), tapes and
other papers or materials containing information relating to any of the Pledged
Collateral or any of the Mortgaged Property including, without limitation, all
customer or tenant lists, identification of suppliers, data, plans, blueprints,
specifications, designs, drawings, appraisals, recorded knowledge, surveys,
studies, engineering reports, test reports, manuals, standards, processing
standards, performance standards, catalogs, research data, computer and
automatic machinery software and programs and the like pertaining to the
operations of such Pledgor or any of the Pledged Collateral or any of the
Mortgaged Property, field repair data, sales data and other information relating
to sales of products now or hereafter manufactured, distributed or franchised by
such Pledgor, accounting information pertaining to such Pledgor's operations or
any of the Pledged Collateral or any of the Mortgaged Property and all media in
which or on which any of the information or knowledge or data or records
relating to such operations or any of the Pledged Collateral or any of the
Mortgaged Property may be recorded or stored and all computer programs used for
the compilation or printout of such information, knowledge, records or data,
(vi) all licenses, consents, permits, variances, certifications, authorizations
and approvals, however characterized, of any Governmental Authority (or any
Person acting on behalf of a Governmental Authority) now or hereafter acquired
or held by such Pledgor pertaining to operations now or hereafter conducted by
such Pledgor or any of the Pledged Collateral or any of the Mortgaged Property
including, without limitation, building permits, certificates of occupancy,
environmental certificates, industrial permits or licenses and certificates of
operation and (vii) all rights to reserves, deferred payments, deposits, refund,
indemnification or claims to the extent the foregoing relate to any Pledged
Collateral or any of the Mortgaged Property and
-10-
claims for tax or other refunds against any Governmental Authority relating to
any Pledged Collateral or any of the Mortgaged Property.
"Goodwill" shall mean, collectively, with respect to each
Pledgor, the entire goodwill connected with such Pledgor's business and, in any
event shall include, without limitation, (i) all goodwill connected with the use
of and symbolized by any of the Intellectual Property Collateral in which such
Pledgor has any interest, (ii) all know-how, trade secrets, customer lists,
proprietary information, inventions, methods, procedures, formulae,
descriptions, name plates, catalogs, confidential information, consulting
agreements, engineering contracts and such other assets which relate to such
goodwill and (iii) all product lines of such Pledgor's business.
"Governmental Authority" shall mean any Federal, state, local,
foreign or other governmental, quasi-governmental or administrative (including
self-regulatory) body, instrumentality, department, agency, authority, board,
bureau, commission, office of any nature whatsoever or other subdivision
thereof, or any court, tribunal, administrative hearing body, arbitration panel
or other similar dispute-resolving body, whether now or hereafter in existence,
or any officer or official thereof, having jurisdiction over any Pledgor or the
Pledged Collateral or any portion thereof.
"Guarantees" shall mean, collectively, the RIH Guarantee and
the Holdings/New Pier Guarantee.
"Guarantors" shall have the meaning assigned to such term in
the Preamble hereof.
"Holdings" shall have the meaning assigned to such term in the
Preamble hereof.
"Holdings/New Pier Guarantee" shall mean the obligations
described in clause (iii) of the definition of "Secured Obligations".
"Holdings/New Pier Guaranteed Obligations" shall have the
meaning assigned to such term in Recital F hereof.
"Indemnified Liabilities" shall have the meaning assigned to
such term in Section 12.4(i) hereof.
"Indemnitees" shall have the meaning assigned to such term in
Section 12.4(i) hereof.
"Initial Pledged Interests" shall mean, with respect to each
Pledgor, all membership interests and/or partnership interests, as applicable,
of each issuer described in Schedule 1.1(c) annexed hereto together with all
rights, privileges, authority and powers of such Pledgor in and to each such
issuer or under the Operative Agreement of each such issuer, and the
certificates, instruments and agreements representing such membership or
partnership interests and any and all interest of such Pledgor in the entries on
the books of any financial intermediary pertaining to such membership or
partnership interests.
-11-
"Initial Pledged Shares" shall mean, collectively, with
respect to each Pledgor, the issued and outstanding shares of capital stock of
each Person described in Schedule 1.1(d) annexed hereto (which are and shall
remain at all times until this Agreement terminates, certificated shares)
together with all rights, privileges, authority and powers of such Pledgor in
and to each such issuer or under the Operative Agreement of each such issuer,
and the certificates, instruments and agreements representing the Initial
Pledged Shares and any and all interest of such Pledgor in the entries on the
books of any financial intermediary pertaining to the Initial Pledged Shares.
"Instruments" shall mean, collectively, with respect to each
Pledgor, all "instruments," as such term is defined in the UCC, and in any event
shall include, without limitation, all promissory notes, drafts, bills of
exchange or acceptances.
"Insurance Certificate" shall mean a certificate evidencing
the Insurance Requirements (i) in substantially the form commonly known as
"ACORD 27" that (A) provides that the insurance has been issued, is in full
force and effect, and conveys all the rights and privileges afforded under the
Insurance Policies, (B) provides an unequivocal obligation to give advance
notice to additional interest parties of termination and notification of changes
and (C) purports to convey all the privileges of the Insurance Policies to the
certificate holders and (ii) that otherwise complies with the requirements with
respect thereto set forth in Section 4.17 hereof.
"Insurance Policies" shall mean, collectively, with respect to
each Pledgor, all insurance policies held by such Pledgor or naming such Pledgor
as insured, additional insured or loss payee (including, without limitation, the
Required Insurance Policies), all such insurance policies entered into after the
date hereof, other than insurance policies (or certificates of insurance
evidencing such insurance policies) relating to health and welfare insurance and
life insurance policies in which such Pledgor is not named as beneficiary (i.e.,
insurance policies that are not "Key Man" insurance policies) and all rights,
claims and recoveries relating thereto (including, without limitation, all
dividends, returned premiums and other rights to receive money in respect of any
of the foregoing).
"Insurance Requirements" means, collectively, with respect to
each Pledgor, all provisions of the Required Insurance Policies, all
requirements of the issuer of any of the Required Insurance Policies and all
orders, rules, regulations and any other requirements of the National Board of
Fire Underwriters (or any other body exercising similar functions) binding upon
such Pledgor and applicable to the Pledged Collateral or any use or condition
thereof.
"Intellectual Property Collateral" shall mean, collectively,
the Patents, Trademarks, Copyrights, Licenses and Goodwill.
"Intercompany Obligations" shall mean the obligations
described in clause (ii) of the definition of "Secured Obligations".
"Intercompany Notes" shall mean, with respect to such Pledgor,
the RIH Secured Note and all other intercompany notes described in Schedule
1.1(e) annexed hereto (and each other intercompany note hereafter acquired by
such Pledgor) and all certificates, instruments or agreements evidencing such
intercompany notes and all assignments, amendments, restatements, supplements,
-12-
extensions, renewals, replacements or modifications thereof to the extent
permitted pursuant to the terms hereof.
"Inventory" shall mean, collectively, with respect to each
Pledgor, all "inventory," as such term is defined in the UCC, of such Pledgor
wherever located and of every class, kind and description and, in any event
shall include, without limitation, (i) all goods, merchandise, raw materials,
work-in-process, returned goods, finished goods, samples and consigned goods (to
the extent of the consignee's interest therein), materials and supplies of any
kind or nature which are or might be used in connection with the manufacture,
printing, publication, packing, shipping, advertising, selling or finishing of
any such goods and all other products, goods, materials and supplies, (ii) all
inventory as is temporarily out of such Pledgor's custody or possession, items
in transit and any returns and repossessions upon any Accounts and (iii) all
substitutions therefor or replacements thereof, and all additions and accessions
thereto.
"Investment Collateral" shall mean, collectively, with respect
to each Pledgor, all "investment property," as such term is used in the UCC, of
such Pledgor and, in any event shall include, without limitation, (i) all
Securities Accounts and Commodities Accounts including, without limitation all
Designated Accounts, (ii) (A) all Financial Assets, cash, checks, drafts,
securities and instruments deposited or held or required to be deposited or held
in such Pledgor's Securities Accounts and all Security Entitlements relating
thereto and (B) all Commodities Contracts, cash, checks, drafts, securities and
instruments deposited or held or required to be deposited or held in such
Pledgor's Commodities Accounts, (iii) all investments and all certificates and
instruments, if any, from time to time representing or evidencing any other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the foregoing items listed in
clauses (i) and (ii) of this definition and (iv) each consent, control or other
agreement, including, without limitation, each Control Agreement, entered into
by such Pledgor with any Qualified Intermediary with which any Securities
Account or Commodities Account is maintained and all rights, if any, and
interests of such Pledgor in, to and under each such consent, control or other
agreement; provided, however, that Investment Collateral shall in no event
include the Securities Collateral.
"Joinder Agreement" shall mean the form of joinder agreement
attached hereto as Exhibit 3.
"L/C Sub-Account" shall have the meaning assigned to such term
in Section 8.3 hereof.
"Lead Arranger" shall have the meaning assigned to such term
in Recital A hereof.
"Lenders" shall have the meaning assigned to such term in
Recital A hereof.
"Lenders' Collateral Agent" shall have the meaning assigned to
such term in Recital A hereof.
"Letters of Credit" shall have the meaning assigned to such
term in the Credit Agreement.
-13-
"Liability Insurance" shall mean, collectively, the insurance
policies and coverages described in clause (B) and, to the extent applicable,
clauses (E) and (F) of Section 4.17(i) hereof.
"Licenses" shall mean, collectively, with respect to each
Pledgor, all license and distribution agreements and covenants not to sue with
any other party with respect to any Patent, Trademark, or Copyright, whether
such Pledgor is a licensor or licensee, distributor or distributee under any
such license or distribution agreement including, without limitation, the
license and distribution agreements listed in Schedule 1.1(f) annexed hereto,
together with any and all (i) renewals, extensions, supplements and
continuations thereof, (ii) income, fees, royalties, damages, claims and
payments now and hereafter due and/or payable thereunder and with respect
thereto including, without limitation, damages and payments for past, present or
future infringements or violations thereof, (iii) rights to sue for past,
present and future infringements or violations thereof and (iv) any other rights
to use, exploit or practice any or all of the Patents, Trademarks or Copyrights.
"Lien" shall have the meaning assigned to such term in the
Credit Agreement.
"Loans" shall have the meaning assigned to such term in the
Credit Agreement.
"Lockbox Agreement" shall mean each lockbox agreement
delivered in accordance with the terms of Section 5.6 hereof in form and
substance satisfactory to the Collateral Agent, in each case, which Collateral
Agent may, in its sole discretion, approve.
"Lockbox Bank" shall have the meaning assigned to such term in
Section 5.6 hereof.
"Lockboxes" shall have the meaning assigned to such term in
Section 5.6 hereof.
"Material Adverse Effect" shall have the meaning assigned to
such term in the Credit Agreement.
"Mortgage" shall have the meaning assigned to such term in the
Credit Agreement.
"Mortgaged Property" shall have the meaning assigned to such
term in the Mortgages.
"Net Available Proceeds" shall have the meaning assigned to
such term in the Credit Agreement.
"Net Condemnation Award" shall mean the proceeds of any award
or payment on account of a Taking, together with any interest earned thereon,
less the amount of any expenses incurred in litigating, arbitrating,
compromising or settling any claim arising out of such Taking.
"Net Insurance Proceeds" shall mean the proceeds of any
insurance payable in respect of such Destruction together with any interest
earned thereon, less the amount of any expenses incurred in litigating,
arbitrating, compromising or settling any claim arising out of such Destruction.
-14-
"New Pier" shall have the meaning assigned to such term in the
Preamble hereof.
"Notice of Sweep Event" shall mean that certain notice to
transfer funds delivered by the Collateral Agent to any Blocked Account Bank
pursuant to the provisions of the applicable Blocked Account Agreement.
"Officers' Certificate" shall have the meaning assigned to
such term in the Credit Agreement.
"Operative Agreement" shall mean (i) in the case of any
limited liability company or partnership, any membership or partnership
agreement thereof and (ii) in the case of any corporation, any charter or
certificate of incorporation and by-laws thereof.
"Patents" shall mean, collectively, with respect to each
Pledgor, all patents issued or assigned to and all patent applications and
registrations made by such Pledgor (whether established or registered or
recorded in the United States or any other country) including, without
limitation, the patents, patent applications, registrations and recordings
listed in Schedule 1.1(g) annexed hereto, together with any and all (i) rights
and privileges arising under applicable law with respect to such Pledgor's use
of any patents, (ii) inventions and improvements described and claimed therein,
(iii) reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (iv) income, fees, royalties, damages, claims and
payments now and hereafter due and/or payable thereunder and with respect
thereto including, without limitation, damages and payments for past, present or
future infringements thereof, (v) rights corresponding thereto throughout the
world and (vi) rights to sue for past, present and future infringements thereof.
"Permitted Liens" shall mean Permitted Liens, as defined in
the Credit Agreement, other than Permitted Liens of the type described in clause
(l) of such definition.
"Person" shall have the meaning assigned to such term in the
Credit Agreement.
"Pledge Amendment" shall have the meaning assigned to such
term in Section 6.1 hereof.
"Pledged Collateral" shall have the meaning assigned to such
term in Section 2.1 hereof.
"Pledged Interests" shall mean, collectively, the Initial
Pledged Interests and the Additional Pledged Interests.
"Pledged Securities" shall mean, collectively, the Pledged
Interests, the Pledged Shares and the Successor Interests.
"Pledged Shares" shall mean, collectively, the Initial Pledged
Shares and the Additional Pledged Shares; provided, however, that such Pledgor
shall not be required to pledge shares possessing more than 65% of the voting
power of all classes of capital stock entitled to vote of any
-15-
Subsidiary which is a controlled foreign corporation (as defined in Section
957(a) of the Tax Code) and, in any event, shall not be required to pledge the
shares of stock of any Subsidiary otherwise required to be pledged pursuant to
this Agreement to the extent that such pledge would constitute an investment of
earnings in United States property under Section 956 (or a successor provision)
of the Tax Code, which investment would trigger an increase in the gross income
of a United States shareholder of such Pledgor pursuant to Section 951 (or a
successor provision) of the Tax Code.
"Pledgor" shall have the meaning assigned to such term in the
Preamble hereof.
"Proceeds" shall mean, collectively, all "proceeds," as such
term is defined in the UCC or under other relevant law, and in any event shall
include, without limitation, any and all (i) proceeds of the conversion,
voluntary or involuntary, of the Pledged Collateral or any portion thereof into
cash or liquidated claims, (ii) proceeds of any insurance (except payments made
to a Person which is not a party to this Agreement), indemnity, warranty,
guaranty or claim payable to the Collateral Agent or to such Pledgor from time
to time with respect to any of the Pledged Collateral including, without
limitation, proceeds in respect of any and all Required Insurance Policies,
(iii) payments (in any form whatsoever) made or due and payable to such Pledgor
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any portion of the Pledged
Collateral by any Governmental Authority (or any Person acting on behalf of a
Governmental Authority), (iv) products of the Pledged Collateral and (v) other
amounts from time to time paid or payable under or in connection with any of the
Pledged Collateral.
"Property Insurance" shall mean, collectively, the insurance
policies and coverages described in clauses (A), (C) and (D) and, to the extent
applicable, clause (F) of Section 4.17(ii) hereof.
"Prudent Operator" shall mean the standard of care taken by a
prudent operator of property and assets similar in use and configuration to the
Pledged Collateral and located in the locality where the Pledged Collateral is
located.
"Purchase Money Obligation" shall have the meaning assigned to
such term in the Credit Agreement.
"Qualified Commodities Intermediary" shall mean a Commodities
Intermediary that has executed and delivered to the Collateral Agent a Control
Agreement in accordance with the provisions hereof.
"Qualified Intermediary" shall mean a Qualified Securities
Intermediary or a Qualified Commodities Intermediary, as the case may be.
"Qualified Securities Intermediary" shall mean a Securities
Intermediary that has executed and delivered to the Collateral Agent a Control
Agreement in accordance with the provisions hereof.
-16-
"Required Insurance Policies" means, collectively, with
respect to each Pledgor, the insurance policies and coverages maintained by such
Pledgor with respect to the Pledged Collateral pursuant to Section 4.17 hereof
and all renewals and extensions thereof.
"Requirements of Law" shall mean, collectively, any and all
requirements of any Governmental Authority including, without limitation, any
and all laws, ordinances, rules, regulations or similar statutes or case law.
"Restoration" shall have the meaning assigned to such term in
Section 4.17(vii)(B) hereof.
"RIH" shall have the meaning assigned to such term in the
Preamble hereof.
"RIH Guarantee" shall have the meaning assigned to such term
in Recital E hereof.
"RIH Guaranteed Obligations" shall mean the obligations
described in clause (ii) of the definition of "Secured Obligations".
"RIH Mortgage" shall have the meaning assigned to such term in
Section 2.1(b) hereof.
"RIH Secured Note" shall have the meaning assigned to such
term in the Credit Agreement.
"Secured Obligations" shall mean (i) all obligations (whether
or not constituting future advances, obligatory or otherwise) of the Borrower
and any and all of the other Credit Parties from time to time arising under or
in respect hereof, the Credit Agreement, the Swap Contracts and the other Credit
Documents (including, without limitation, the obligations to pay principal,
interest and all other charges, fees, expenses, commissions, reimbursements,
premiums, indemnities and other payments related to or in respect of the
obligations contained in this Agreement, the Credit Agreement, the Swap
Contracts and the other Credit Documents), (ii) all obligations (whether or not
constituting future advances, obligatory or otherwise) of RIH under the RIH
Guarantee from time to time arising under or in respect hereof, the Credit
Agreement, the Swap Contracts and the other Credit Documents (including, without
limitation, the obligations to pay principal, interest and all other charges,
fees, expenses, commissions, reimbursements, premiums, indemnities and other
payments related to or in respect of the obligations contained in this
Agreement, the Credit Agreement, the Swap Contracts and the other Credit
Documents), (iii) all obligations (whether or not constituting future advances,
obligatory or otherwise) of Holdings and New Pier under the Holdings/New Pier
Guarantee from time to time arising under or in respect hereof, the Credit
Agreement, the Swap Contracts and the other Credit Documents (including, without
limitation, the obligations to pay principal, interest and all other charges,
fees, expenses, commissions, re-
-17-
imbursements, premiums, indemnities and other payments related to or in respect
of the obligations contained in this Agreement, the Credit Agreement, the Swap
Contracts and the other Credit Documents) and (iv) all obligations of RIH from
time to time arising under or in respect hereof and the RIH Secured Note
(including, without limitation, the obligations to pay principal, interest and
all other charges, fees, expenses, commissions, reimbursements, premiums,
indemnities and other payments related to or in respect of the obligations
contained in this Agreement and the RIH Secured Note), in each of the cases
described in clauses (i) through (iv) of this definition, in each case whether
(w) such obligations are direct or indirect, secured or unsecured, joint or
several, absolute or contingent, due or to become due whether at stated
maturity, by acceleration or otherwise, (x) arising in the regular course of
business or otherwise, (y) for payment or performance and/or (z) now existing or
hereafter arising (including, without limitation, interest and other obligations
arising or accruing after the commencement of any bankruptcy, insolvency,
reorganization or similar proceeding with respect to any Credit Party or any
other Person, or which would have arisen or accrued but for the commencement of
such proceeding, even if such obligation or the claim therefor is not
enforceable or allowable in such proceeding).
"Secured Parties" shall mean (i) in the case of the Borrower
Obligations, the Holdings/New Pier Guaranteed Obligations and the RIH Guaranteed
Obligations, the Collateral Agent and the other Creditors and (ii) in the case
of the Intercompany Obligations, the Collateral Agent and the Borrower.
"Securities Account" shall mean, with respect to each Pledgor,
each "securities account," as such term is defined in the UCC, established or
maintained for or on behalf of such Pledgor.
"Securities Act" shall have the meaning assigned to such term
in Section 10.4(ii) hereof.
"Securities Collateral" shall mean, collectively, the Pledged
Securities, and the Intercompany Notes and the Distributions.
"Securities Intermediary" shall mean "securities
intermediary," as such term is defined in the UCC.
"Security Documents" shall have the meaning assigned to such
term in the Credit Agreement.
"Security Entitlement" shall mean, with respect to each
Pledgor, each "security entitlement," as such term is defined in the UCC, of
such Pledgor and in any event shall include, without limitation, the rights and
property interests of such Pledgor with respect to any and all Financial Assets.
"Subsidiaries" shall have the meaning assigned to such term in
the Credit Agreement.
"Successor Interests" shall mean, collectively, with respect
to each Pledgor, all shares of each class of the capital stock of the successor
corporation or interests or certificates of the successor limited liability
company or partnership owned by such Pledgor (unless such successor is such
Pledgor itself) formed by or resulting from any consolidation or merger in which
any Person listed in Schedule 1.1(c) or Schedule 1.1(d) annexed hereto is not
the surviving entity; provided, however, that
-18-
the pledge of the Successor Interests affected hereby shall in no event affect
the obligations of such Pledgor under any provision prohibiting such action
hereunder or under the Credit Agreement.
"Swap Contracts" shall have the meaning assigned to such term
in Recital B hereof.
"Taking" shall mean any taking of the General Collateral or
any portion thereof, in or by condemnation or other eminent domain proceedings
pursuant to any law, general or special, or by reason of the temporary
requisition of the use of the Pledged Collateral or Mortgaged Property or any
portion thereof, by any Governmental Authority, civil or military.
"Tax Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Trademarks" shall mean, collectively, with respect to each
Pledgor, all trademarks (including service marks), logos, Federal and state
trademark registrations and applications made by such Pledgor, common law
trademarks and trade names owned by or assigned to such Pledgor and all
registrations and applications for the foregoing, including, without limitation,
the registrations and applications listed in Schedule 1.1(i) annexed hereto,
together with any and all (i) rights and privileges arising under applicable law
with respect to such Pledgor's use of any trademarks, (ii) reissues,
continuations, extensions and renewals thereof, (iii) income, fees, royalties,
damages and payments now and hereafter due and/or payable thereunder and with
respect thereto, including, without limitation, damages, claims and payments for
past, present or future infringements thereof, (iv) rights corresponding thereto
throughout the world and (v) rights to sue for past, present and future
infringements thereof.
"UCC" shall mean the Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided, however, that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any item or portion of the Pledged
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, "UCC" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or effect of perfection or
non-perfection; provided, further, however, that with respect to any term used
herein that is defined in either (i) Article 9 of the UCC as in effect on the
date hereof or (ii) Article 9 of the UCC as in effect at any relevant time
(including Revised Article 9), the meaning to be ascribed to such term with
respect to any particular item or type of property shall be the more
encompassing of the two definitions.
"Wholly Owned Subsidiary" shall have the meaning assigned to
such term in the Credit Agreement.
SECTION 1.2 Interpretation. In this Agreement, unless
otherwise specified, (i) singular words include the plural and plural words
include the singular, (ii) words importing any gender include the other gender,
(iii) references to any Person include such Person's successors and assigns and
in the case of an individual, the word "successors" includes such Person's
heirs, devisees, legatees, executors, administrators and personal
representatives, (iv) references to any statute or other law
-19-
include all applicable rules, regulations and orders adopted or made thereunder
and all statutes or other laws amending, consolidating or replacing the statute
or law referred to, (v) the words "consent," "approve" and "agree," and
derivations thereof or words of similar import, mean the prior written consent,
approval or agreement of the Person in question, (vi) the words "include" and
"including," and words of similar import, shall be deemed to be followed by the
words "without limitation", (vii) the words "hereto," "herein," "hereof" and
"hereunder," and words of similar import, refer to this Agreement in its
entirety, (viii) unless otherwise expressly indicated, references to Articles,
Sections, Schedules, Exhibits, subsections, paragraphs and clauses are to the
Articles, Sections, Schedules, Exhibits, subsections, paragraphs and clauses
hereof, (ix) the Schedules and Exhibits to this Agreement, in each case as
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the provisions hereof are incorporated herein by
reference, (x) the titles and headings of Articles, Sections, Schedules,
Exhibits, subsections, paragraphs and clauses are inserted as a matter of
convenience only and shall not affect the construction of any provisions hereof
and (xi) all obligations of each Pledgor hereunder shall be satisfied by each
Pledgor at each Pledgor's sole cost and expense.
SECTION 1.3 Resolution of Drafting Ambiguities. Each Pledgor
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party (i.e., the Collateral Agent) shall not be employed in the
interpretation hereof.
ARTICLE II
GRANT OF SECURITY AND SECURED OBLIGATIONS
SECTION 2.1 Pledge; Assignment of RIH Collateral. (a) As
collateral security for the payment and performance in full of all the Secured
Obligations, each Pledgor hereby pledges, assigns, transfers and grants to the
Collateral Agent for its benefit and for the benefit of the Secured Parties, a
security interest in and to and pledge of all of the right, title and interest
of such Pledgor in, to and under the following property, wherever located,
whether now existing or hereafter arising or acquired from time to time
(collectively, the "Pledged Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) Documents;
(iv) Instruments;
(v) Chattel Paper;
-20-
(vi) Equipment;
(vii) Pledged Securities;
(viii) Intercompany Notes;
(ix) Distributions;
(x) Investment Collateral;
(xi) Intellectual Property Collateral;
(xii) Acquisition Document Rights;
(xiii) General Intangibles;
(xiv) Bank Accounts;
(xv) Collateral Account; and
(xvi) To the extent not covered by clauses (i) through (xv) of
this sentence, all other personal property and any and all Proceeds of any and
all of the foregoing.
Notwithstanding the foregoing provisions of this Section 2.1,
the Pledged Collateral shall not include any property or asset hereafter
acquired by Pledgor which is subject to a Purchase Money Obligation or Capital
Lease Obligation to the extent the documents evidencing such obligation prohibit
the imposition of a Lien on the property or asset subject to such obligation;
provided, however, that at such time as such property or asset is no longer
subject to such Purchase Money Obligation or Capital Lease Obligation, such
property or asset shall (without any act or delivery by any Person) constitute
Pledged Collateral hereunder.
In addition, notwithstanding anything herein to the contrary,
the Pledged Collateral, as to any Pledgor, shall exclude:
(i) a grant of such Pledgor's right under any Contracts to
which such Pledgor is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant
would, under the terms of such Contract, result in a breach or
termination of the terms of, or constitute a default under or
termination of such Contract; provided, however, that at such time as
such Contract is no longer subject to such restriction, such Contract
shall (without any act or delivery by any Person) constitute Pledged
Collateral hereunder;
(ii) vehicles; and
(iii) Additional Pledged Shares and Additional Pledged
Interests in joint ventures and non-Wholly Owned Subsidiaries to the
extent permitted pursuant to Section 10.04(g) of the
-21-
Credit Agreement only to the extent that the provisions of the
Operating Agreement relating to such Additional Pledged Shares or
Additional Pledged Interests shall prohibit such pledge.
(b) Without limiting the generality of the foregoing
provisions of Section 2.1(a) hereof, to secure the prompt payment and
performance by the Borrower of the Borrower Obligations, the Borrower hereby
assigns, transfers, sets over and delivers to the Collateral Agent, and grants
to the Collateral Agent a first priority security interest in, all its right,
title and interest in, to and under the RIH Secured Note, the Mortgage granted
and delivered by RIH, as mortgagor (the "RIH Mortgage") and the Mortgaged
Property encumbered thereby, and this Agreement and the Pledged Collateral
pledged by RIH hereunder to secure the Intercompany Obligations and any and all
proceeds of any thereof (collectively, the "RIH Collateral").
(c) Without limiting the Collateral Agent's rights under the
immediately preceding sentences, the Borrower hereby absolutely assigns and
transfers to the Collateral Agent all of the Borrower's rights to receive and
hereby directs RIH to pay or cause to be paid directly to the Collateral Agent
all principal and interest payments and any other payments due under or received
pursuant to the RIH Secured Note, RIH Mortgage and this Agreement to the extent
it secures the Intercompany Obligations, including, without limitation, any and
all proceeds and products for application by the Collateral Agent in accordance
with the provisions of the Credit Agreement.
SECTION 2.2 Secured Obligations. This Agreement secures, and
the Pledged Collateral is collateral security for, the payment and performance
in full when due of, (i) in the case of the Borrower, the Borrower Obligations,
(ii) in the case of RIH, the RIH Guaranteed Obligations and (iii) in the case of
Holdings and New Pier, the Holdings/New Pier Guaranteed Obligations.
SECTION 2.3 Reserved.
SECTION 2.4 No Release. Nothing set forth in this Agreement
shall relieve any Pledgor from the performance of any term, covenant, condition
or agreement on such Pledgor's part to be performed or observed under or in
respect of any of the Pledged Collateral or from any liability to any Person
under or in respect of any of the Pledged Collateral or shall impose any
obligation on the Collateral Agent or any other Secured Party to perform or
observe any such term, covenant, condition or agreement on such Pledgor's part
to be so performed or observed or shall impose any liability on the Collateral
Agent or any other Secured Party for any act or omission on the part of such
Pledgor relating thereto or for any breach of any representation or warranty on
the part of such Pledgor contained in this Agreement, any Swap Contract, any
other Credit Document or the RIH Secured Note or under or in respect of the
Pledged Collateral or made in connection herewith or therewith. This Section 2.4
shall survive the termination hereof and the discharge of such Pledgor's other
obligations under this Agreement, any Swap Contract, the other Credit Documents
and the RIH Secured Note.
-22-
ARTICLE III
PERFECTION; SUPPLEMENTS; FURTHER ASSURANCES;
USE OF PLEDGED COLLATERAL
SECTION 3.1 Delivery of Certificated Securities Collateral.
All certificates, agreements or instruments representing or evidencing the
Pledged Securities and Intercompany Notes, to the extent not previously
delivered to the Collateral Agent, shall immediately upon receipt thereof by any
Pledgor be delivered to and held by or on behalf of the Collateral Agent
pursuant hereto. All certificated Pledged Securities and Intercompany Notes
shall be in suitable form for transfer by delivery or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time upon the occurrence and during the continuance of any
Event of Default, to endorse, assign or otherwise transfer to or to register in
the name of the Collateral Agent or any of its nominees or endorse for
negotiation any or all of the Securities Collateral, without any indication that
such Securities Collateral is subject to the security interest hereunder. In
addition, the Collateral Agent shall have the right at any time to exchange
certificates representing or evidencing Securities Collateral for certificates
of smaller or larger denominations.
SECTION 3.2 Perfection of Uncertificated Securities
Collateral. If any issuer of Pledged Securities is organized in a jurisdiction
which does not permit the use of certificates to evidence equity ownership, or
if any of the Pledged Securities are at any time not evidenced by certificates
of ownership, then each applicable Pledgor shall (i) to the extent permitted by
applicable law and except with respect to the CRDA Bonds, record such pledge on
the equityholder register or the books of the issuer, (ii) except with respect
to the CRDA Bonds, cause the issuer to execute and deliver to the Collateral
Agent an acknowledgment of the pledge of such Pledged Securities substantially
in the form of Exhibit 1 annexed hereto, (iii) file financing statements and
execute any customary pledge forms or other documents necessary or appropriate
to complete the pledge and give the Collateral Agent the right to transfer such
Pledged Securities under the terms hereof and (iv) if requested by the
Collateral Agent, provide to the Collateral Agent an opinion of counsel, in form
and substance satisfactory to the Collateral Agent, confirming such pledge and
perfection thereof. No Pledgor will permit any Pledged Securities (including the
CRDA Bonds) to be evidenced by certificates unless such Pledgor delivers such
certificates to the Collateral Agent in accordance with the provisions of
Section 3.1 hereof with respect thereto.
SECTION 3.3 Financing Statements and Other Filings. The only
filings, registrations and recordings necessary and appropriate to create,
preserve, protect and perfect the security interest granted by each Pledgor to
the Collateral Agent pursuant to this Agreement in respect of the Pledged
Collateral on the date hereof are listed in Schedule 3.3 annexed hereto. All
such filings, registrations and recordings have been filed, registered and
recorded contemporaneously with the execution of the Credit Documents or have
been delivered to the Collateral Agent in proper form for filing. Each Pledgor
agrees that at any time and from time to time, it will execute and, at the sole
cost and
-23-
expense of the Pledgors file and refile, or permit the Collateral Agent
to file and refile, such financing statements, continuation statements and other
documents (including, without limitation, this Agreement), in form acceptable to
the Collateral Agent, in such offices (including, without limitation, the United
States Patent and Trademark Office and the United States Copyright Office) as
the Collateral Agent may deem necessary or appropriate, wherever required or
permitted by law in order to perfect, continue and maintain a valid,
enforceable, first priority security interest in the Pledged Collateral as
provided herein and to preserve the other rights and interests granted to the
Collateral Agent hereunder, as against third parties, with respect to any
Pledged Collateral. Each Pledgor hereby authorizes the Collateral Agent to file
any such financing or continuation statement or other document without the
signature of such Pledgor where permitted by law. Each Pledgor hereby agrees
that a carbon, photographic, photostatic or other reproduction of this Agreement
or of a financing statement is sufficient as a financing statement.
SECTION 3.4 Perfection in Investment Collateral and Blocked
Accounts. Within 90 days after the Closing Date (or such longer period as may be
acceptable to the Collateral Agent) each Pledgor shall comply with the
provisions of Section 8.1 and Section 8.4 hereof.
SECTION 3.5 Joinder of Affiliates. The Pledgors shall cause
each Affiliate of the Borrower which, from time to time, after the date hereof
shall be required to pledge any assets to the Collateral Agent for the benefit
of the Secured Parties pursuant to the provisions of the Credit Agreement, to
execute and deliver to the Collateral Agent a Joinder Agreement and, upon such
execution and delivery, such Affiliate shall be deemed to be a "Guarantor" and a
"Pledgor" for all purposes hereunder.
SECTION 3.6 Motor Vehicles. At any time after the occurrence
and during the continuance of an Event of Default, each Pledgor shall, upon the
request of the Collateral Agent, deliver to the Collateral Agent originals of
the certificates of title or ownership for the motor vehicles (and any other
Equipment covered by certificates of title or ownership owned by it) with the
Collateral Agent listed as lienholder therein.
SECTION 3.7 Supplements; Further Assurances. Each Pledgor
agrees to take such further actions, and to execute and deliver to the
Collateral Agent such additional assignments, agreements, supplements, powers
and instruments, as the Collateral Agent may deem necessary or appropriate,
wherever required or permitted by law, in order to perfect, preserve and protect
the security interest in the Pledged Collateral as provided herein and the
rights and interests granted to the Collateral Agent hereunder, to carry into
effect the purposes hereof or better to assure and confirm unto the Collateral
Agent or permit the Collateral Agent to exercise and enforce its respective
rights, powers and remedies hereunder with respect to any Pledged Collateral.
Without limiting the generality of the foregoing, each Pledgor shall make,
execute, endorse, acknowledge, file or refile and/or deliver to the Collateral
Agent from time to time such lists, descriptions and designations of the Pledged
Collateral, copies of warehouse receipts, receipts in the nature of warehouse
receipts, bills of lading, documents of title, vouchers, invoices, schedules,
confirmatory assignments, supplements, additional security agreements,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments. The Collateral Agent
may institute and
-24-
maintain, in its own name or in the name of any Pledgor, such suits and
proceedings as the Collateral Agent may be advised by counsel shall be necessary
or expedient to prevent any impairment of the security interest in or the
perfection thereof in the Pledged Collateral. All of the foregoing shall be at
the sole cost and expense of the Pledgors.
SECTION 3.8 Use and Pledge of Pledged Collateral. Unless an
Event of Default shall have occurred and be continuing, the Collateral Agent
shall from time to time execute and deliver, upon written request of any Pledgor
and at the sole cost and expense of the Pledgors, any and all instruments,
certificates or other documents, in a form reasonably requested by such Pledgor,
necessary or appropriate in the reasonable judgment of such Pledgor to enable
such Pledgor to continue to exploit, license, use, enjoy and protect the Pledged
Collateral (other than the RIH Collateral) in accordance with the terms hereof
and the Credit Agreement. The Pledgors and the Collateral Agent acknowledge that
this Agreement is intended to grant to the Collateral Agent for the benefit of
the Secured Parties a security interest in and Lien upon the Pledged Collateral
and shall not constitute or create a present assignment of any of the Pledged
Collateral (other than the RIH Collateral).
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Pledgor represents, warrants and covenants as follows:
SECTION 4.1 Payment. Such Pledgor shall pay as and when the
same shall become due, whether at its stated maturity, by acceleration or
otherwise, each and every amount payable by such Pledgor under the Credit
Documents, Swap Contracts and the RIH Secured Note.
SECTION 4.2 Reserved.
SECTION 4.3 Perfection Actions . Upon the completion of the
deliveries, filings and other actions contemplated in Section 3.1 through
Section 3.4 hereof, the security interest granted to the Collateral Agent for
the benefit of the Secured Parties pursuant to this Agreement in and to the
Pledged Collateral will constitute a perfected, continuing first priority
security interest therein, superior and prior to the rights of all other Persons
therein other than with respect to the holders of Permitted Liens.
SECTION 4.4 Limitation on Liens. Such Pledgor is as of the
date hereof, and, as to Pledged Collateral acquired by it from time to time
after the date hereof, such Pledgor will be, the sole direct and beneficial
owner of all Pledged Collateral pledged by it hereunder free from any Lien or
other right, title or interest of any Person other than Permitted Liens. Pledgor
shall defend the Pledged Collateral pledged by it hereunder against all claims
and demands of all Persons at any time claiming any interest therein adverse to
the Collateral Agent or any other Secured Party.
SECTION 4.5 Reserved.
-25-
SECTION 4.6 Chief Executive Office; Records; Change of Name.
The chief executive office and jurisdiction of organization of such Pledgor is
located at the address indicated next to its name in Schedule 4.6 annexed
hereto. Such Pledgor shall not move its chief executive office to any location
other than one within the Continental United States that is listed in such
Schedule 4.6 except to such new location as such Pledgor may establish in
accordance with the last sentence of this Section 4.6. All tangible evidence of
all Accounts and General Intangibles of such Pledgor and the only original books
of account and records of such Pledgor relating thereto are, and will continue
to be, kept at such chief executive office or such other location listed in
Schedule 4.6 annexed hereto, or at such new location for such chief executive
office as such Pledgor may establish in accordance with the last sentence of
this Section 4.6. All Accounts and General Intangibles of such Pledgor are, and
will continue to be, controlled and monitored (including, without limitation,
for general accounting purposes) from such chief executive office or such other
location listed in Schedule 4.6 annexed hereto, or at such new location for such
chief executive office as such Pledgor may establish in accordance with the last
sentence of this Section 4.6. All Accounts and General Intangibles of such
Pledgor are, and will continue to be, controlled and monitored (including,
without limitation, for general accounting purposes) from such chief executive
office location or such other location listed in Schedule 4.6 annexed hereto, or
such new location as such Pledgor may establish in accordance with the last
sentence of this Section 4.6. Such Pledgor shall not establish a new location
for its chief executive office to any location other than one within the
Continental United States that is listed in Schedule 4.6 or change its name,
identity or structure or jurisdiction of organization until (i) it shall have
given the Collateral Agent not less than 30 days' prior written notice (in the
form of an Officers' Certificate) of its intention so to do, clearly describing
such new location within the Continental United States or name, identity,
structure or jurisdiction and providing such other information in connection
therewith as the Collateral Agent may request and (ii) with respect to such new
location or name, such Pledgor shall have taken all action satisfactory to the
Collateral Agent to maintain the perfection and priority of the security
interest of the Collateral Agent for the benefit of the Secured Parties in the
Pledged Collateral intended to be granted hereby, including, without limitation,
using commercially reasonable efforts to obtain waivers of landlord's or
warehouseman's liens with respect to such new location, if applicable.
SECTION 4.7 Location of Inventory and Equipment. All Inventory
and Equipment of such Pledgor are located at the chief executive office or such
other location listed in Schedule 4.6 annexed hereto. Such Pledgor shall not
move any Inventory or Equipment to any location other than one within the
Continental United States that is listed in such Schedule 4.6 until (i) it shall
have given the Collateral Agent not less than 30 days' prior written notice (in
the form of an Officers' Certificate) of its intention so to do, clearly
describing such new location within the Continental United States and providing
such other information in connection therewith as the Collateral Agent may
request and (ii) with respect to such new location, such Pledgor shall have
taken all action satisfactory to the Collateral Agent to maintain the perfection
and priority of the security interest of the Collateral Agent for the benefit of
the Secured Parties in the Pledged Collateral intended to be granted hereby,
including, without limitation, using commercially reasonable efforts to obtain
waivers of landlord's or warehouseman's liens with respect to such new location,
if applicable.
-26-
SECTION 4.8 Warehouse Receipts Non-Negotiable. If any
warehouse receipt or receipt in the nature of a warehouse receipt is issued with
respect to any of the Pledged Collateral, the applicable Pledgor shall not
permit such warehouse receipt or receipt in the nature thereof to be
"negotiable" (as such term is used in Section 7-104 of the UCC or under other
relevant law).
SECTION 4.9 Condition and Maintenance of Equipment. The
Equipment of such Pledgor is in good repair, working order and condition,
reasonable wear and tear excepted. Each Pledgor shall cause the Equipment to be
maintained and preserved in good repair, working order and condition, reasonable
wear and tear excepted, and shall as quickly as commercially practicable make or
cause to be made all repairs, replacements and other improvements which are
necessary or appropriate in the conduct of such Pledgor's business; provided,
however, that in the case of any Destruction which (individually or in the
aggregate) exceeds $500,000 to any of the Equipment, Pledgor shall give prompt
notice thereof to the Collateral Agent.
SECTION 4.10 Corporate Names; Prior Transactions. Such Pledgor
has not, during the past five years, been known by or used any other corporate
or fictitious name or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
property or assets out of the ordinary course of business, except as set forth
in Schedule 4.10 annexed hereto.
SECTION 4.11 Reserved.
SECTION 4.12 No Violations, etc. The pledge of the Pledged
Securities pursuant to this Agreement does not violate Regulations T, U or X of
the Federal Reserve Board.
SECTION 4.13 Reserved.
SECTION 4.14 Reserved.
SECTION 4.15 Reserved.
SECTION 4.16 Pledged Collateral. All information set forth
herein, including the schedules annexed hereto, and all information contained in
any documents, schedules and lists heretofore delivered to any Secured Party in
connection with this Agreement, in each case, relating to the Pledged
Collateral, is accurate and complete in all material respects. The Pledged
Collateral described on the schedules annexed hereto constitutes all of the
property of such type of Pledged Collateral owned or held by the Pledgors at the
time of delivery of such schedules.
SECTION 4.17 Insurance; Condemnation.
(i) Required Insurance Policies and Coverages. No Pledgor
shall take any action that impairs the rights of the Collateral Agent or any
Secured Party in the Pledged Collateral and (A) as of the date hereof, the
Pledged Collateral and the use, occupancy and operation thereof comply with all
Insurance Requirements, and there exists no default under any Insurance
Requirement, (B) all premiums due and payable with respect to the Required
Insurance Policies have been paid, (C) all
-27-
Insurance Policies are in full force and effect and such Pledgor has not
received notice of violation or cancellation thereof and (D) all Insurance
Policies or Insurance Certificates have been delivered to the Collateral Agent
in form satisfactory to the Collateral Agent. Each Pledgor shall at all times
keep the Pledged Collateral insured, at such Pledgor's own expense, to the
Collateral Agent's satisfaction against fire, theft and all other risks to which
the Pledged Collateral may be subject, in such amounts and with such deductibles
as would be maintained by a Prudent Operator or as the Collateral Agent may
otherwise require, including, without limitation, the following insurance
policies and coverages:
(A) physical hazard insurance on an "all risk" basis
covering, without limitation, hazards commonly covered by
fire and extended coverage, lightning, windstorm, civil
commotion, hail, riot, strike, water damage, sprinkler
leakage, collapse and malicious mischief, in an amount
equal to the Full Replacement Cost of the Equipment and
Inventory;
(B) commercial general liability insurance against claims for
bodily injury, death or property damage occurring on, in
or about the Pledged Collateral, and covering any and all
claims, including, without limitation, all legal
liability to the extent insurable imposed upon the
Collateral Agent and all court costs and attorneys' fees,
arising out of or connected with the possession, use,
leasing, operation or condition of the Pledged
Collateral;
(C) explosion insurance in respect of any boilers, machinery
and similar apparatus located on or comprising the
Equipment and Inventory;
(D) business interruption insurance;
(E) worker's compensation insurance as required by the laws
of the state where the Pledged Collateral is located to
protect such Pledgor and the Collateral Agent against
claims for injuries sustained in the course of employment
at the premises of such Pledgor; and
(F) such other insurance against risks as the Collateral
Agent may from time to time require.
(ii) Required Form of Insurance Policies. Each Insurance
Policy described in clause (i) of this Section 4.17 shall provide that:
(A) it may not be modified, reduced, canceled or otherwise
terminated without at least thirty (30) days' prior
written notice to the Collateral Agent;
(B) the Collateral Agent is permitted to pay any premium
therefor within thirty (30) days after receipt of any
notice stating that such premium has not been paid when
due;
-28-
(C) all losses thereunder shall be payable notwithstanding
any act or negligence of such Pledgor or its agents or
employees which otherwise might have resulted in a
forfeiture of all or a part of such insurance payments;
(D) to the extent such Insurance Policy constitutes Property
Insurance, all losses payable thereunder shall be payable
to the Collateral Agent, as loss payee, pursuant to a
standard non-contributory New York mortgagee endorsement
and shall be in an amount at least sufficient to prevent
coinsurance liability; and
(E) with respect to Liability Insurance, the Collateral Agent
shall be named as an additional insured.
(iii) Settlements. Settlement of any claim under any of the
Required Insurance Policies, if such claim involves any loss in excess of
$1,000,000 (in the judgment of the Collateral Agent), shall require the prior
written approval of the Collateral Agent, and such Pledgor shall cause each such
policy to contain a provision to such effect.
(iv) Renewals. At least ten (10) days prior to the expiration
of any Required Insurance Policy, such Pledgor shall deliver to the Collateral
Agent a Required Insurance Policy or Policies renewing or extending such
expiring Required Insurance Policy or Policies, renewal or extension Insurance
Certificates or other reasonable evidence of renewal or extension providing that
the Insurance Policies are in full force and effect.
(v) Additional Insurance. Such Pledgor shall not purchase
separate insurance policies concurrent in form or contributing in the event of
loss with those Required Insurance Policies required to be maintained under this
Section 4.17, unless the Collateral Agent is included thereon as an additional
insured and, if applicable, with loss payable to the Collateral Agent under an
endorsement containing the provisions described in clause (ii) of this Section
4.17. Such Pledgor shall immediately notify the Collateral Agent whenever any
such separate insurance policy is obtained and shall promptly deliver to the
Collateral Agent the Required Insurance Policy or Insurance Certificate
evidencing such insurance.
(vi) Blanket Coverage. Such Pledgor may maintain the coverages
required by clause (i) of this Section 4.17 under blanket policies covering the
Pledged Collateral and other property owned or operated by such Pledgor or an
Affiliate of such Pledgor if the terms of such blanket policies otherwise comply
with the provisions of clause (i) of this Section 4.17 and contain specific
coverage allocations in respect of the Equipment and Inventory complying with
the provisions of clause (i) of this Section 4.17.
(vii) Proceeds of Destructions and Taking.
(A) If there shall occur any Destruction which could
reasonably be expected to result in proceeds in an amount greater than $500,000
or that could reasonably be expected to result in a Material Adverse Effect,
such Pledgor shall promptly send to the Collateral Agent a notice setting
-29-
forth the nature and extent of such Destruction. If there shall occur any Taking
which could reasonably be expected to result in proceeds in an amount greater
than $500,000 or that could reasonably be expected to result in a Material
Adverse Effect, such Pledgor shall immediately notify the Collateral Agent upon
receiving notice of such Taking or commencement of proceedings therefor. The
Collateral Agent may participate in any proceedings or negotiations which might
result in any Taking, and such Pledgor shall deliver or cause to be delivered to
the Collateral Agent all instruments requested by it to permit such
participation. The Collateral Agent may be represented by counsel satisfactory
to it at the expense of such Pledgor in connection with any such participation.
Such Pledgor shall pay all fees, costs and expenses incurred by the Collateral
Agent in connection with any Taking and in seeking and obtaining any award or
payment on account thereof. The Net Insurance Proceeds and Net Condemnation
Awards are hereby assigned and shall be paid to the Collateral Agent. Such
Pledgor shall take all steps necessary to notify the condemning authority of
such assignment. All Net Insurance Proceeds and Net Condemnation Awards, shall
be applied in accordance with the provisions of Sections 4.17(vii)(B) and
4.17(vii)(C) hereof. In the event there is a Net Condemnation Award or Net
Insurance Proceeds relating to the Mortgaged Property and there is an
inconsistency between the provisions of this Agreement and the Mortgage relating
to such Mortgaged Property, the terms and provisions of the Mortgage will
prevail.
(B) So long as no Event of Default shall have occurred and be
continuing, in the event there shall be a Net Condemnation Award or Net
Insurance Proceeds, such Pledgor shall have the right, at such Pledgor's option,
to apply such Net Condemnation Award or Net Insurance Proceeds to the payment of
the Secured Obligations in accordance with the provisions of Section 2.10 of the
Credit Agreement or to the uses permitted by Section 2.10(i)(w) of the Credit
Agreement (each, a "Restoration") of the Pledged Collateral. In the event such
Pledgor elects to perform a Restoration, such Pledgor shall within one (1)
Business Day after the date that such Pledgor receives notice of collection by
the Collateral Agent of the applicable Net Insurance Proceeds or Net
Condemnation Award, as the case may be, deliver to the Collateral Agent (1) a
written notice of such election and (2) an Officers' Certificate stating that
(a) the Net Insurance Proceeds or Net Condemnation Award, as the case may be,
shall be utilized to perform a Restoration in the manner contemplated by this
Section 4.17(vii)(B) and (b) no Event of Default has occurred and is continuing
(the items described in clauses (1) and (2) of this sentence, collectively, the
"Restoration Election Notice"). In the event the Collateral Agent does not
receive a Restoration Election Notice within such 1-day period, the Collateral
Agent may apply any such Net Insurance Proceeds or Net Condemnation Award held
by the Collateral Agent to the payment of the Secured Obligations in accordance
with the provisions of Section 2.10 of the Credit Agreement or, at the option of
the Collateral Agent, may continue to hold such Net Insurance Proceeds or Net
Condemnation Award as additional collateral to secure the performance by such
Pledgor of the Secured Obligations. In the event such Pledgor elects to perform
any Restoration contemplated by this Section 4.17(vii)(B), the Collateral Agent
shall release such Net Condemnation Award or Net Insurance Proceeds to such
Pledgor as soon as practicable following receipt of a Restoration Election
Notice in accordance with the provisions of Section 8.2(ii) hereof. Such Pledgor
shall, within fifteen (15) days following the date of its receipt of any
proceeds in respect of a Destruction or Taking, as the case may be, commence and
diligently continue to perform the Restoration in accordance with the provisions
of Section 2.10 of the Credit Agreement.
-30-
(C) In the event there shall be a Net Condemnation Award or
Net Insurance Proceeds in an amount equal to or greater than $500,000, the
Collateral Agent shall not release any part of the Net Condemnation Award or Net
Insurance Proceeds until such Pledgor has furnished to the Collateral Agent an
Officers' Certificate setting forth: (1) a brief description of the Restoration
to be made, (2) the dollar amount of the expenditures to be made, or costs
incurred by such Pledgor in connection with such Restoration; provided, however,
that such Pledgor shall so complete such Restoration with its own funds to the
extent that the amount of any Net Condemnation Award or Net Insurance Proceeds
is insufficient for such purpose and (3) each request for payment shall be made
on at least ten (10) days' prior notice to the Collateral Agent and such request
shall state (A) that all the Restoration work then complete has been done in all
material respects in accordance with all applicable provisions of law, (B) the
sums requested are required to reimburse the Pledgor for payments by the Pledgor
to, or are due to, the contractors, subcontractors, materialmen, laborers or
other persons rendering services or materials for the Restoration and (C) that
all Liens covering that part of the Restoration previously paid for, if any,
have been waived and there has not been filed with respect to all or any portion
of the Pledged Collateral any Lien.
(D) In the event that there shall be any surplus after
application of the Net Condemnation Award or the Net Insurance Proceeds to
Restoration, such surplus shall be applied as Net Cash Proceeds in accordance
with Section 2.10 of the Credit Agreement.
(viii) Delivery After Foreclosure. In the event that the
proceeds of any insurance claim are paid after the Collateral Agent has
exercised its right to foreclose after an Event of Default such proceeds shall
be paid to the Collateral Agent to satisfy any deficiency remaining after such
foreclosure. The Collateral Agent shall retain its interest in the Insurance
Policies required to be maintained pursuant to this Agreement during any
redemption period.
SECTION 4.18 Payment of Taxes; Compliance with Laws;
Contesting Liens; Claims. Each Pledgor represents and warrants that all Charges
imposed upon or assessed against the Pledged Collateral have been paid and
discharged except to the extent such Charges constitute a Permitted Lien. Each
Pledgor shall pay all Charges against the Pledged Collateral before the same
shall become delinquent or in default (other than such Charges that constitute
Permitted Liens). Each Pledgor shall comply with all Requirements of Law
applicable to the Pledged Collateral the failure to comply with which would have
a Material Adverse Effect on the value or use of such Pledged Collateral or the
Lien on such Pledged Collateral granted to the Collateral Agent hereunder.
SECTION 4.19 Reserved.
SECTION 4.20 Reserved.
SECTION 4.21 Benefit to Guarantors. Each Guarantor will
receive substantial benefit as a result of the execution, delivery and
performance of the Credit Documents.
-31-
ARTICLE V
CERTAIN PROVISIONS CONCERNING ACCOUNTS
SECTION 5.1 Maintenance of Records. Each Pledgor shall keep
and maintain at its own cost and expense complete records of each Account, in a
manner consistent with prudent business practice, including, without limitation,
records of all payments received, all credits granted thereon, all merchandise
returned and all other documentation relating thereto. Each Pledgor shall, at
such Pledgor's sole cost and expense, upon the Collateral Agent's demand made at
any time after the occurrence and during the continuance of any Event of
Default, deliver all tangible evidence of Accounts, including, without
limitation, all documents evidencing Accounts and any books and records relating
thereto to the Collateral Agent or to its representatives (copies of which
evidence and books and records may be retained by such Pledgor). Upon the
occurrence and during the continuance of any Event of Default, the Collateral
Agent may transfer a full and complete copy of any Pledgor's books, records,
credit information, reports, memoranda and all other writings relating to the
Accounts to and for the use by any Person that has acquired or is contemplating
acquisition of an interest in the Accounts or the Collateral Agent's security
interest therein without the consent of any Pledgor.
SECTION 5.2 Legend. Each Pledgor shall legend, at the request
of the Collateral Agent made at any time after the occurrence of any Event of
Default and in form and manner satisfactory to the Collateral Agent, the
Accounts and the other books, records and documents of such Pledgor evidencing
or pertaining to the Accounts with an appropriate reference to the fact that the
Accounts have been assigned to the Collateral Agent for the benefit of the
Secured Parties and that the Collateral Agent has a security interest therein.
SECTION 5.3 Reserved.
SECTION 5.4 Reserved.
SECTION 5.5 Instruments. Each Pledgor shall deliver to the
Collateral Agent, within five days after receipt thereof by such Pledgor, any
Instrument evidencing Accounts which is in the principal amount of $100,000 or
more other than Instruments issued by casino patrons in the ordinary course of
business. Any Instrument delivered to the Collateral Agent pursuant to this
Section 5.5 shall be appropriately endorsed (if applicable) to the order of the
Collateral Agent, as agent for the Secured Parties, and shall be held by the
Collateral Agent as further security hereunder; provided, however, that so long
as no Default shall have occurred and be continuing, the Collateral Agent shall,
promptly upon request of such Pledgor, make appropriate arrangements for making
any Instrument pledged by such Pledgor available to such Pledgor for purposes of
presentation, collection or renewal (any such arrangement to be effected, to the
extent deemed appropriate by the Collateral Agent, against trust receipt or like
document).
SECTION 5.6 Payment into Lockboxes. At any time after the
occurrence of an Event of Default, each Pledgor shall, upon the request of the
Collateral Agent, maintain one or more lockboxes (the "Lockboxes") with a
Lockbox Bank and shall irrevocably instruct all account debtors
-32-
on all of the Accounts of such Pledgor, all agents for the collection of
Accounts and all issuers or obligors under letters of credit or other documents
supporting Accounts to remit all Collections to such Lockboxes. Each Pledgor,
the Collateral Agent and each of the financial institutions selected by such
Pledgor and acceptable to the Collateral Agent (each, a "Lockbox Bank" and,
collectively, the "Lockbox Banks") shall enter into Lockbox Agreements, which
among other things shall provide for the opening of an account for the deposit
of Collections (each, a "Collection Account" and, collectively, the "Collection
Accounts") at a Lockbox Bank. Each Pledgor shall maintain separate and distinct
Lockboxes and Collection Accounts and the Lockboxes and Collection Accounts of
each Pledgor will be clearly identified as the Lockbox and Collection Accounts
of such Pledgor and no other Person, including no other Pledgor. Such amounts
shall be so deposited on a daily basis. All Collections and other amounts
received by or on behalf of each such Pledgor from any account debtor, agent or
credit support party shall be held in trust for the benefit of the Collateral
Agent and shall be deposited into the Collection Account of such Pledgor within
one Business Day after such Pledgor's receipt thereof. Such arrangements shall
not be modified or terminated without the prior written consent of the
Collateral Agent.
ARTICLE VI
CERTAIN PROVISIONS CONCERNING SECURITIES COLLATERAL
SECTION 6.1 Pledge of Additional Securities Collateral. Each
Pledgor shall, upon obtaining any Pledged Securities or Intercompany Notes of
any Person constituting Pledged Collateral, accept the same in trust for the
benefit of the Collateral Agent and promptly (and in any event within five
Business Days) deliver to the Collateral Agent a pledge amendment, duly executed
by such Pledgor, in substantially the form of Exhibit 2 annexed hereto (each, a
"Pledge Amendment"), and the certificates and other documents required under
Section 3.1 and Section 3.2 in respect of the additional Pledged Securities or
Intercompany Notes which are to be pledged pursuant to this Agreement together
with the operating agreement, if any, relating thereto and confirming the
attachment of the Lien hereby created on and in respect of such additional
Pledged Securities or Intercompany Notes. Each Pledgor hereby authorizes the
Collateral Agent to attach each Pledge Amendment to this Agreement and agrees
that all Pledged Securities or Intercompany Notes listed on any Pledge Amendment
delivered to the Collateral Agent shall for all purposes hereunder be considered
Pledged Collateral.
SECTION 6.2 Voting Rights; Distributions; etc.
(i) So long as no Event of Default shall have occurred and be
continuing:
(A) Each Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not inconsistent with
the terms or purposes hereof or any other Credit Document; provided,
however, that no Pledgor shall in any event exercise such rights in
any manner which would violate any provision of the Credit Agreement.
-33-
(B) Each Pledgor shall be entitled to receive and retain, and
to utilize free and clear of the Lien hereof, any and all
Distributions, but only if and to the extent made in accordance with
the provisions of the Credit Agreement; provided, however, that any
and all such Distributions consisting of rights or interests in the
form of securities shall be forthwith delivered to the Collateral
Agent to hold as Pledged Collateral and shall, if received by any
Pledgor, be received in trust for the benefit of the Collateral
Agent, be segregated from the other property or funds of such Pledgor
and be forthwith delivered to the Collateral Agent as Pledged
Collateral in the same form as so received (with any necessary
endorsement).
(C) The Collateral Agent shall be deemed without further
action or formality to have granted to each Pledgor all necessary
consents relating to voting rights and shall, if necessary, upon
written request of any Pledgor and at the sole cost and expense of
the Pledgors, from time to time execute and deliver (or cause to be
executed and delivered) to such Pledgor all such instruments as such
Pledgor may reasonably request in order to permit such Pledgor to
exercise the voting and other rights which it is entitled to exercise
pursuant to Section 6.2(i)(A) hereof and to receive the Distributions
which it is authorized to receive and retain pursuant to Section
6.2(i)(B) hereof.
(ii) Upon the occurrence and during the continuance of any
Event of Default:
(A) All rights of each Pledgor to exercise the voting and
other consensual rights it would otherwise be entitled to exercise
pursuant to Section 6.2(i)(A) hereof without any action or the giving
of any notice shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall thereupon have the sole
right to exercise such voting and other consensual rights.
(B) All rights of each Pledgor to receive Distributions which
it would otherwise be authorized to receive and retain pursuant to
Section 6.2(i)(B) hereof shall cease and all such rights shall
thereupon become vested in the Collateral Agent, which shall
thereupon have the sole right to receive and hold as Pledged
Collateral such Distributions.
(iii) Each Pledgor shall, at its sole cost and expense, from
time to time execute and deliver to the Collateral Agent appropriate instruments
as the Collateral Agent may request in order to permit the Collateral Agent to
exercise the voting and other rights which it may be entitled to exercise
pursuant to Section 6.2(ii)(A) hereof and to receive all Distributions which it
may be entitled to receive under Section 6.2(ii)(B) hereof.
(iv) All Distributions which are received by any Pledgor
contrary to the provisions of Section 6.2(ii)(B) hereof shall be received in
trust for the benefit of the Collateral Agent, shall be segregated from other
funds of such Pledgor and shall immediately be paid over to the Collateral Agent
as Pledged Collateral in the same form as so received (with any necessary
endorsement).
SECTION 6.3 No New Securities. Except to the extent otherwise
permitted under Article IX hereof and under Section 10.04(g) of the Credit
Agreement, each Pledgor shall cause each
-34-
issuer of the Pledged Securities not to issue any stock or other securities or
equity interests in addition to or in substitution for the Pledged Securities
issued by such issuer, except to such Pledgor.
SECTION 6.4 Reserved.
SECTION 6.5 Reserved.
ARTICLE VII
CERTAIN PROVISIONS CONCERNING INTELLECTUAL
PROPERTY COLLATERAL
SECTION 7.1 Grant of License. For the purpose of enabling the
Collateral Agent, during the continuance of an Event of Default, to exercise
rights and remedies under Article X hereof at such time as the Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, each Pledgor hereby grants to the Collateral Agent, to the extent
assignable, an irrevocable, non-exclusive license (exercisable without payment
of royalty or other compensation to such Pledgor) to use, assign, license or
sublicense any of the Intellectual Property Collateral now owned or hereafter
acquired by such Pledgor, wherever the same may be located, including in such
license access to all media in which any of the licensed items may be recorded
or stored and to all computer programs used for the compilation or printout
hereof.
SECTION 7.2 Registrations. Except pursuant to licenses and
other user agreements entered into by any Pledgor in the ordinary course of
business that are listed in Schedule 1.1(f) annexed hereto, on and as of the
date hereof (i) each Pledgor owns and possesses the right to use, and has done
nothing to authorize or enable any other Person to use, any Copyright, Patent or
Trademark listed in Schedules 1.1(a), 1.1(g) and 1.1(i) and (ii) all
registrations listed in Schedules 1.1(a), 1.1(g) and 1.1(i) are valid and in
full force and effect.
SECTION 7.3 Reserved.
SECTION 7.4 Reserved.
SECTION 7.5 After-Acquired Property. If any Pledgor shall, at
any time before the Secured Obligations have been paid in full or the
Commitments of the Lenders to make any Loan or to issue any Letter of Credit
have expired or been sooner terminated (i) obtain any rights to any additional
Intellectual Property Collateral or (ii) become entitled to the benefit of any
additional Intellectual Property Collateral or any renewal or extension thereof,
including any reissue, division, continuation, or continuation-in-part of any
Intellectual Property Collateral, or any improvement on any Intellectual
Property Collateral, the provisions hereof shall automatically apply thereto and
any such item enumerated in clause (i) or (ii) of this Section 7.5 with respect
to such Pledgor shall automatically constitute Intellectual Property Collateral
if such would have constituted Intellectual Property Collateral at the time of
execution hereof and be subject to the Lien and security interest created by
-35-
this Agreement without further action by any party. Each Pledgor shall promptly
(i) provide to the Collateral Agent written notice of any of the foregoing and
(ii) confirm the attachment of the Lien and security interest created by this
Agreement to any rights described in clauses (i) and (ii) of the immediately
preceding sentence of this Section 7.5 by execution of an instrument in form
acceptable to the Collateral Agent.
SECTION 7.6 Modifications. Each Pledgor authorizes the
Collateral Agent to modify this Agreement by amending Schedules 1.1(a), 1.1(f),
1.1(g) and 1.1(i) annexed hereto to include any Intellectual Property Collateral
acquired or arising after the date hereof of such Pledgor including, without
limitation, any of the items listed in Section 7.5 hereof.
SECTION 7.7 Reserved.
SECTION 7.8 Litigation.
(i) Unless there shall occur and be continuing any Event of
Default, each Pledgor shall have the right to commence and prosecute in its own
name, as the party in interest, for its own benefit and at the sole cost and
expense of the Pledgors, such applications for protection of the Intellectual
Property Collateral and suits, proceedings or other actions to prevent the
infringement, counterfeiting, unfair competition, dilution, diminution in value
or other damage as are necessary to protect the Intellectual Property
Collateral. Each Pledgor shall promptly notify the Collateral Agent in writing
as to the commencement and prosecution of any such actions, or threat thereof
relating to any material Intellectual Property Collateral, and shall provide to
the Collateral Agent such information with respect thereto as may be requested
by the Collateral Agent. In accordance with Section 12.4 hereof each Pledgor
shall indemnify and hold harmless each Indemnitee from and against all
Indemnified Liabilities which may be imposed on, incurred by or asserted against
such Indemnitee in connection with or in any way arising out of the suits,
proceedings or other actions contemplated in this Section 7.8(i).
(ii) Upon the occurrence and during the continuance of any
Event of Default, the Collateral Agent shall have the right but shall in no way
be obligated to file applications for protection of the Intellectual Property
Collateral and/or bring suit in the name of any Pledgor, the Collateral Agent or
the Secured Parties to enforce the Intellectual Property Collateral and any
license thereunder. In the event of such suit, each Pledgor shall, at the
request of the Collateral Agent, do any and all lawful acts and execute any and
all documents requested by the Collateral Agent in aid of such enforcement and
the Pledgors shall promptly reimburse and indemnify the Collateral Agent, as the
case may be, for all costs and expenses incurred by the Collateral Agent in the
exercise of its rights under this Section 7.8 in accordance with Section 12.3
hereof. In the event that the Collateral Agent shall elect not to bring suit to
enforce the Intellectual Property Collateral, each Pledgor agrees, at the
request of the Collateral Agent, to take all actions necessary, whether by suit,
proceeding or other action, to prevent the infringement, counterfeiting, unfair
competition, dilution, diminution in value of or other damage to any of the
Intellectual Property Collateral by others and for that purpose agrees to
diligently maintain any suit, proceeding or other action against any Person so
infringing necessary to prevent such infringement.
-36-
ARTICLE VIII
CERTAIN PROVISIONS CONCERNING DESIGNATED
ACCOUNTS, COLLATERAL ACCOUNT AND COLLECTION OF ACCOUNTS
SECTION 8.1 Designated Accounts.
(i) Each Pledgor hereby represents and warrants that it does
not now maintain, and will not in the future maintain, any other financial
accounts (except in accordance with the provisions of this Article VIII) with
any Securities Intermediary, Commodities Intermediary, or any other banking or
financial institution other than a Designated Account subject to a Control
Agreement; provided, however, that any Pledgor may establish and maintain
additional financial accounts with any Qualified Intermediary or any new banking
or financial institution if (A) in the case of an existing Qualified
Intermediary, such Pledgor, such Qualified Intermediary and the Collateral Agent
shall have entered into an amendment to the relevant Control Agreement to
include such new Designated Account under such amendment in form and substance
satisfactory to the Collateral Agent and (B) in the case of a new banking or
financial institution, (1) the applicable Pledgor shall have given the
Collateral Agent 30 days' prior written notice of its intention to establish
such new financial account with such new banking or financial institution, (2)
such new banking or financial institution shall be acceptable to the Collateral
Agent and (3) such new banking or financial institution shall enter into a
Control Agreement. Upon compliance with the provisions of clause (B) of the
immediately preceding sentence, such new banking or financial institution shall
constitute a "Qualified Intermediary" hereunder. Each Pledgor has, prior to or
contemporaneously with the execution and delivery hereof, endeavored to enter
into a Control Agreement with each currently existing Securities Intermediary or
Commodities Intermediary. If any Pledgor is unable to obtain a Control Agreement
from such Securities Intermediary or Commodities Intermediary, then such Pledgor
shall terminate all financial accounts maintained with such Securities
Intermediary or Commodities Intermediary and immediately transfer any and all
Investment Collateral maintained with such institution to a Designated Account
maintained by a Qualified Intermediary. Each Pledgor shall accept the same in
trust for the benefit of the Collateral Agent and within one Business Day of
actual receipt thereof, deposit any Investment Collateral and any new
securities, instruments, documents or other property by reason of ownership of
the Investment Collateral (other than payments of a kind described in Section
8.1(iii)(B) hereof) received by it into a Designated Account that is subject to
a Control Agreement.
(ii) Each Pledgor hereby acknowledges and agrees that each
Qualified Securities Intermediary constitutes a "securities intermediary" under
the UCC and each Qualified Commodities Intermediary constitutes a "commodities
intermediary" under the UCC for such Pledgor. Each Pledgor hereby acknowledges
and agrees that notwithstanding any provisions hereof or any other circumstance
to the contrary, the Collateral Agent shall at all times (A) have "control" (as
defined in Section 8-106 of the UCC) of the Investment Collateral, as confirmed
in the Control Agreement and (B) be authorized to direct the Qualified
Securities Intermediary to comply with, and without further consent of any
Pledgor or any investment manager or any other person acting or purporting to
act for any Pledgor, the Qualified Securities Intermediary shall comply with,
all Entitlement Orders origi-
-37-
nated by the Collateral Agent with respect to the Investment Collateral. The
Collateral Agent hereby agrees that it shall not issue any Entitlement Orders to
the Qualified Securities Intermediary in respect of the Investment Collateral
except in connection with the Collateral Agent's exercise of remedies upon the
occurrence of an Event of Default.
(iii) So long as no Event of Default has occurred and is
continuing, each Pledgor may, to the extent not inconsistent with the other
provisions hereof or the provisions of the Credit Agreement:
(A) trade, sell, exchange, lend or transfer from a Designated
Account; and
(B) receive and retain, free of all right, title and interest
of Collateral Agent, all interest and dividend payments made in
respect of the Investment Collateral and exercise any voting rights
with respect thereto.
(iv) As between the Collateral Agent and the Pledgors, the
Pledgors shall bear the investment risk with respect to the Investment
Collateral, and the risk of loss of, damage to, or the destruction of the
Investment Collateral, whether in the possession of, or maintained as a security
entitlement by, or subject to the control of, the Collateral Agent, a Qualified
Intermediary, the Pledgor or any other Person; provided, however, that nothing
contained in this Section 8.1(iv) shall release or relieve any Qualified
Intermediary of its duties and obligations to the Pledgors or any other Person
under the Control Agreement or under applicable law. Each Pledgor shall promptly
pay all Charges and fees of whatever kind or nature with respect to the
Investment Collateral pledged by it or this Agreement. In the event any Pledgor
shall fail to make such payment contemplated in the immediately preceding
sentence, the Collateral Agent may do so for the account of such Pledgor and the
Pledgors shall promptly reimburse and indemnify the Collateral Agent from all
costs and expenses incurred by the Collateral Agent under this Section 8.1(iv)
in accordance with Section 12.3 hereof.
SECTION 8.2 Collateral Account.
(i) Deposits into Collateral Account. Each Pledgor shall
deposit into the Collateral Account from time to time (A) the cash proceeds of
any of the Pledged Collateral or any Mortgaged Property pursuant to any
disposition thereof in accordance with Section 10.05 of the Credit Agreement,
(B) the cash proceeds of any Taking or Destruction or loss of title with respect
to any Pledged Collateral or Mortgaged Property, (C) any cash in respect of any
Pledged Collateral to which the Collateral Agent is entitled pursuant to Section
6.2 hereof, (D) any amounts such Pledgor is required to pledge as additional
collateral security hereunder pursuant to the Credit Documents, (E) cash
proceeds of any of the Pledged Collateral received by Collateral Agent pursuant
to the provisions of any Credit Document and (F) any other amounts that such
Pledgor desires to pledge to the Collateral Agent for the benefit of the Secured
Parties as additional collateral security hereunder.
(ii) Application of Amounts in Collateral Account. The balance
from time to time in the Collateral Account shall constitute part of the Pledged
Collateral hereunder and shall not constitute payment of the Secured Obligations
until applied as hereinafter provided. So long as no Event of Default has
occurred and is continuing or will result therefrom, the Collateral Agent shall
-38-
within two Business Days of receiving a request of such Pledgor for release of
cash proceeds constituting (I) Net Insurance Proceeds or Net Condemnation Awards
from the Collateral Account, remit such cash proceeds on deposit in the
Collateral Account to or upon the order of such Pledgor, so long as such Pledgor
has (A) with respect to any Pledged Collateral, satisfied the conditions
relating thereto set forth in Section 4.17(vii) hereof and (B) with respect to
any Mortgaged Property, satisfied the conditions relating thereto set forth in
Article X of such Mortgage, (II) Net Available Proceeds from any Asset Sale from
the Collateral Account, remit such cash proceeds on deposit in the Collateral
Account to or upon the order of such Pledgor so long as such Pledgor has
certified that it will immediately thereupon apply such cash proceeds in the
manner contemplated in Section 2.10 of the Credit Agreement and (III) with
respect to the L/C Sub-Account at such time as all Letters of Credit shall have
been terminated and all of the liabilities in respect of the Letters of Credit
have been paid in full. At any time following the occurrence and during the
continuance of an Event of Default, the Collateral Agent may (and, if instructed
by the Lenders as specified in the Credit Agreement, shall) in its (or their)
discretion apply or cause to be applied (subject to collection) the balance from
time to time outstanding to the credit of the Collateral Account to the payment
of the Secured Obligations in the manner specified in Article XI hereof subject,
however, in the case of amounts deposited in the L/C Sub-Account, to the
provisions of Section 8.3 hereof). The balance from time to time in the
Collateral Account shall be subject to withdrawal only as provided herein.
(iii) Investment of Balance in Collateral Account. Amounts on
deposit in the Collateral Account shall be invested from time to time in such
Cash Equivalents as the respective Pledgor (or, after the occurrence and during
the continuance of an Event of Default, the Collateral Agent) shall determine,
which Cash Equivalents shall be held in the name and be under the control of the
Collateral Agent (or any sub-agent); provided, however, that at any time after
the occurrence and during the continuance of an Event of Default, the Collateral
Agent may (and, if instructed by the Lenders as specified in the Credit
Agreement, shall) in its (or their) discretion at any time and from time to time
elect to liquidate any such Cash Equivalents and to apply or cause to be applied
the proceeds thereof to the payment of the Secured Obligations in the manner
specified in Article XI hereof.
SECTION 8.3 Cover for Letter of Credit Liabilities. Amounts
deposited into the Collateral Account as cover for liabilities in respect of
Letters of Credit under the Credit Agreement pursuant to Section 2.10(d) thereof
shall be held by the Collateral Agent in a separate sub-account designated as
the "L/C Sub-Account" (the "L/C Sub-Account") and, notwithstanding any other
provision hereof to the contrary, all amounts held in the L/C Sub-Account shall
constitute collateral security first for the liabilities in respect of Letters
of Credit outstanding from time to time and second as collateral security for
the other Secured Obligations hereunder until such time as all Letters of Credit
shall have been terminated and all of the liabilities in respect of Letters of
Credit have been paid in full.
SECTION 8.4 Blocked Accounts.
(i) As of the date hereof, no Pledgor has any account with any
financial institution other than Designated Accounts and those accounts listed
on Schedule 8.4 annexed hereto.
-39-
(ii) Each Pledgor, the Collateral Agent and each of the
financial institutions selected by such Pledgor (which may include, without
limitation the financial institutions listed in Schedule 8.4 annexed hereto) and
reasonably acceptable to the Collateral Agent (each, a "Blocked Account Bank"
and, collectively, the "Blocked Account Banks") shall promptly and in no event
later than 90 days after the Closing Date (or such longer period as may be
acceptable to the Collateral Agent) enter into Blocked Account Agreements, which
among other things shall provide for the opening (or, in the case of the
accounts described on Schedule 8.4 annexed hereto, confirm the existence) of an
account for the deposit of Collections (each, a "Blocked Account" and,
collectively, the "Blocked Accounts") at a Blocked Account Bank. Each Pledgor
shall at all times after the expiration of such 90-day period (or such longer
period as may be acceptable to the Collateral Agent) maintain separate and
distinct Blocked Accounts and the Blocked Accounts of each Pledgor will be
clearly identified as the Blocked Account of such Pledgor and no other Person,
including no other Pledgor. Subject to Section 8.4(iv) hereof, in the event any
of the accounts and financial institutions listed on Schedule 8.4 annexed hereto
shall not constitute Blocked Accounts and Blocked Account Banks, respectively,
upon the expiration of such 90-day period (or such longer period as may be
acceptable to the Collateral Agent), the applicable Pledgor shall close such
account. Subject to Section 8.4(iv), all Collections and other amounts received
by or on behalf of each such Pledgor from any account debtor, agent or credit
support party shall be held in trust for the benefit of the Collateral Agent,
and each. Each Pledgor shall, as promptly as practicable (but in no event later
than ten Business Days after receipt thereof), deposit all Collections into a
Blocked Account of such Pledgor. Such arrangements shall not be modified or
terminated without the prior written consent of the Collateral Agent.
(iii) Upon the occurrence of an Event of Default, the
Collateral Agent may require that all good funds held in each Blocked Account
shall be wired each Business Day into a separate account for each Pledgor (each,
a "Concentration Account") maintained by the Collateral Agent. Each Pledgor
shall accurately report all amounts deposited in the Blocked Accounts to ensure
the proper transfer of funds as set forth above. Each Pledgor acknowledges and
agrees that, (A) upon the occurrence of an Event of Default and delivery to the
Blocked Account Banks by the Collateral Agent of a Notice of Sweep Event,
pursuant to the Blocked Account Agreements, such Pledgor will have irrevocably
directed the Blocked Account Banks to transfer no later than 2:00 P.M. (New York
time) each Business Day all available funds, investments, money, cash,
Instruments, securities, rights, proceeds and other property and amounts
contained in such Pledgor's respective Blocked Accounts into such Pledgor's
Concentration Account and (B) it is the intention of such Pledgor that the
Collateral Agent shall have a perfected security interest in the Blocked
Accounts and the Concentration Accounts as of the date hereof. The Collateral
Agent hereby agrees that it shall not deliver to any Blocked Account Bank any
Notice of Sweep Event except after the occurrence of an Event of Default. Upon
the occurrence of an Event of Default, if any Pledgor receives directly any
remittance or payments, such Pledgor shall hold such remittance and payments in
trust for the Collateral Agent, and shall deposit such amounts into its
respective Concentration Account within one Business Day after such Pledgor's
receipt thereof. Upon the occurrence of an Event of Default, the Collateral
Agent may require that all deposits maintained in the Concentration Accounts and
the Blocked Accounts, and any additional moneys and other property subsequently
maintained in any Blocked Account shall be transferred to the Collateral
Account. All such deposits in the Collateral Account shall be held by the
Collateral Agent as Collateral for the Secured Obligations or applied or
released in the manner set
-40-
forth in Section 8.2 hereof. The costs and expenses (including attorney's fees)
of collection, whether incurred by any Pledgor or the Collateral Agent (or any
sub-agent), shall be borne by the Pledgors.
(iv) The Pledgors shall not at any time deposit or cause to be
deposited into any account, except as otherwise specifically permitted pursuant
to the provisions of Sections 8.1, 8.2 and 8.4 hereof, any funds, investments,
money, cash, instruments, securities, rights, proceeds and other property and
amounts received by or on behalf of the Pledgors from any source; provided,
however, that so long as no Event of Default shall have occurred and be
continuing, the Pledgors may deposit or cause to be deposited into such account
such funds, investments, money, cash, instruments, securities, rights, proceeds
and other property and amounts received by or on behalf of the Pledgors so long
as the aggregate sum thereof shall in no event exceed at any time $500,000;
provided, further, that all amounts in excess of $500,000 shall be deposited
directly into the Blocked Accounts or Concentration Account, of the applicable
Pledgor or the Collateral Account in accordance with the provisions of this
Section 8.4.
SECTION 8.5 Restriction on Credit Balances in Deposit
Accounts. The Pledgors shall not at any time deposit or cause to be deposited
into any account, except as otherwise specifically permitted pursuant to the
provisions of this Article VIII, any funds, investments, money, cash,
instruments, securities, rights, proceeds and other property and amounts
received by or on behalf of the Pledgors from any source; provided, however,
that so long as no Event of Default shall have occurred and be continuing, the
Pledgors may deposit or cause to be deposited into such account such funds,
investments, money, cash, instruments, securities, rights, proceeds and other
property and amounts received by or on behalf of the Pledgors so long as the
aggregate sum thereof shall in no event exceed at any time $500,000; provided,
further, that all amounts in excess of $500,000 shall be deposited directly into
the Collection Account of the applicable Pledgor or the Collateral Account in
accordance with the provisions of this Article VIII.
SECTION 8.6 Certain Limitations. The obligations under this
Article VIII with respect to transfers of funds into Bank Accounts with
particular banks and limitations on expenditures therefrom are subject to
limitations under applicable Gaming Laws as to the qualification of such bank to
hold such funds and provisions under applicable Gaming Laws requiring
expenditure of funds for specified purposes (e.g. gaming taxes and any
obligations imposed by the Casino Reinvestment Development Authority).
ARTICLE IX
TRANSFERS AND OTHER LIENS
No Pledgor shall (i) sell, convey, assign or otherwise dispose
of, or grant any option with respect to, any of the Pledged Collateral pledged
by it hereunder except as permitted by the Credit Agreement, (ii) create or
permit to exist any Lien upon or with respect to any of the Pledged Collateral
pledged by it hereunder other than Permitted Liens or (iii) permit any issuer of
the Pledged Securities constituting a Wholly Owned Subsidiary to merge,
consolidate or change its legal form,
-41-
unless (A) all of the outstanding equity interests of the surviving or resulting
entity are, upon such merger or consolidation, pledged hereunder and (B) such
Pledgor shall have complied with the applicable provisions of the Credit
Agreement.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 Remedies. Upon the occurrence and during the
continuance of any Event of Default, the Collateral Agent may from time to time
exercise in respect of the Pledged Collateral, in addition to the other rights
and remedies provided for herein or otherwise available to it:
(i) Subject to applicable Gaming Laws, personally, or by
agents or attorneys, immediately take possession of the Pledged
Collateral or any part thereof, from any Pledgor or any other Person
who then has possession of any part thereof with or without notice or
process of law, and for that purpose may enter upon any Pledgor's
premises where any of the Pledged Collateral is located, remove such
Pledged Collateral, remain present at such premises to receive copies
of all communications and remittances relating to the Pledged
Collateral and use in connection with such removal and possession any
and all services, supplies, aids and other facilities of any Pledgor;
(ii) Demand, sue for, collect or receive any money or property
at any time payable or receivable in respect of the Pledged
Collateral including, without limitation, the RIH Collateral and
instruct the obligor or obligors on any agreement, instrument or
other obligation constituting part of the Pledged Collateral
including, without limitation the RIH Collateral and to make any
payment required by the terms of such agreement, instrument or other
obligation directly to the Collateral Agent, and in connection with
any of the foregoing, compromise, settle, extend the time for payment
and make other modifications with respect thereto; provided, however,
that in the event that any such payments are made directly to any
Pledgor, prior to receipt by any such obligor of such instruction,
such Pledgor shall segregate all amounts received pursuant thereto in
trust for the benefit of the Collateral Agent and shall promptly (but
in no event later than one Business Day after receipt thereof)
deposit such amounts into the Collateral Account;
(iii) Subject to applicable Gaming Laws, sell, assign, grant a
license to use or otherwise liquidate, or direct any Pledgor to sell,
assign, grant a license to use or otherwise liquidate, any and all
investments made in whole or in part with the Pledged Collateral or
any part thereof, and take possession of the proceeds of any such
sale, assignment, license or liquidation;
(iv) Subject to applicable Gaming Laws, take possession of the
Pledged Collateral or any part thereof, by directing any Pledgor in
writing to deliver the same to the Collateral Agent at any place or
places so designated by the Collateral Agent, in which event such
-42-
Pledgor shall at its own expense: (A) forthwith cause the same to be
moved to the place or places designated by the Collateral Agent and
there delivered to the Collateral Agent, (B) store and keep any
Pledged Collateral so delivered to the Collateral Agent at such place
or places pending further action by the Collateral Agent and (C)
while the Pledged Collateral shall be so stored and kept, provide
such security and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition.
Each Pledgor's obligation to deliver the Pledged Collateral as
contemplated in this Section 10.1(iv) is of the essence hereof. Upon
application to a court of equity having jurisdiction, the
Collateral Agent shall be entitled to a decree requiring specific
performance by any Pledgor of such obligation;
(v) Subject to applicable Gaming Laws, withdraw all moneys,
instruments, securities and other property in any bank, financial
securities, deposit or other account of any Pledgor (including,
without limitation, the accounts contemplated in Article VIII hereof)
for application to the Secured Obligations as provided in Article XI
hereof;
(vi) Retain and apply the Distributions to the Secured
Obligations as provided in Article XI hereof;
(vii) Subject to applicable Gaming Laws, exercise any and all
rights as beneficial and legal owner of the Pledged Collateral,
including, without limitation, perfecting assignment of and
exercising any and all voting, consensual and other rights and powers
with respect to any Pledged Collateral; and
(viii) Subject to applicable Gaming Laws, all the rights and
remedies of a secured party on default under the UCC, and the
Collateral Agent may also in its sole discretion, without notice
except as specified in Section 10.2 hereof, sell, assign or grant a
license to use the Pledged Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker's
board or at any of the Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices
and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Collateral Agent or any other Secured
Party or any of their respective Affiliates may be the purchaser,
licensee, assignee or recipient of any or all of the Pledged
Collateral at any such sale and shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for
all or any portion of the Pledged Collateral sold, assigned or
licensed at such sale, to use and apply any of the Secured
Obligations owed to such Person as a credit on account of the
purchase price of any Pledged Collateral payable by such Person at
such sale. Each purchaser, assignee, licensee or recipient at any
such sale shall acquire the property sold, assigned or licensed
absolutely free from any claim or right on the part of any Pledgor,
and each Pledgor hereby waives, to the fullest extent permitted by
law, all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. The Collateral Agent shall
not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given. The Collateral Agent may adjourn
any public or private sale from time to time by announcement at the
time and place
-43-
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Each Pledgor
hereby waives, to the fullest extent permitted by law, any claims
against the Collateral Agent arising by reason of the fact that the
price at which any Pledged Collateral may have been sold, assigned or
licensed at such a private sale was less than the price which might
have been obtained at a public sale, even if the Collateral Agent
accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree.
SECTION 10.2 Notice of Sale. Each Pledgor acknowledges and
agrees that, to the extent notice of sale shall be required by law, ten days'
notice to such Pledgor of the time and place of any public sale or of the time
after which any private sale or other intended disposition is to take place
shall be commercially reasonable notification of such matters. No notification
need be given to any Pledgor if it has signed, after the occurrence of an Event
of Default, a statement renouncing or modifying any right to notification of
sale or other intended disposition.
SECTION 10.3 Waiver of Notice and Claims. Each Pledgor hereby
waives, to the fullest extent permitted by applicable law, notice or judicial
hearing in connection with the Collateral Agent's taking possession or the
Collateral Agent's disposition of any of the Pledged Collateral, including,
without limitation, any and all prior notice and hearing for any prejudgment
remedy or remedies and any such right which such Pledgor would otherwise have
under law, and each Pledgor hereby further waives, to the fullest extent
permitted by applicable law: (i) all damages occasioned by such taking of
possession, (ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral Agent's
rights hereunder and (iii) all rights of redemption, appraisal, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law. The
Collateral Agent shall not be liable for any incorrect or improper payment made
pursuant to this Article X in the absence of gross negligence or willful
misconduct. Any sale of, or the grant of options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, either at law or in equity, of the applicable
Pledgor therein and thereto, and shall be a perpetual bar both at law and in
equity against such Pledgor and against any and all Persons claiming or
attempting to claim the Pledged Collateral so sold, optioned or realized upon,
or any part thereof, from, through or under such Pledgor.
SECTION 10.4 Certain Sales of Pledged Collateral.
(i) Each Pledgor recognizes that, by reason of certain
prohibitions contained in law, rules, regulations or orders of any Governmental
Authority, the Collateral Agent may be compelled, with respect to any sale of
all or any part of the Pledged Collateral, to limit purchasers to those who meet
the requirements of such Governmental Authority. Each Pledgor acknowledges that
any such sales may be at prices and on terms less favorable to the Collateral
Agent than those obtainable through a public sale without such restrictions,
and, notwithstanding such circumstances, agrees that any such restricted sale
shall be deemed to have been made in a commercially reasonable manner and that,
except as may be required by applicable law, the Collateral Agent shall have no
obligation to engage in public sales.
-44-
(ii) Each Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, the Collateral Agent
may be compelled, with respect to any sale of all or any part of the Securities
Collateral, to limit purchasers to Persons who will agree, among other things,
to acquire such Securities Collateral for their own account, for investment and
not with a view to the distribution or resale thereof. Each Pledgor acknowledges
that any such private sales may be at prices and on terms less favorable to the
Collateral Agent than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering made pursuant to
a registration statement under the Securities Act), and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that the Collateral Agent shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Securities Collateral for the period of time necessary to permit the
issuer thereof to register it for a form of public sale requiring registration
under the Securities Act or under applicable state securities laws, even if such
issuer would agree to do so.
(iii) Notwithstanding the foregoing, each Pledgor shall, upon
the occurrence and during the continuance of any Event of Default, at the
request of the Collateral Agent, for the benefit of the Collateral Agent, cause
any registration, qualification under or compliance with any Federal or state
securities law or laws to be effected with respect to all or any part of the
Securities Collateral as soon as practicable and at the sole cost and expense of
the Pledgors. Each Pledgor will use its best efforts to cause such registration
to be effected (and be kept effective) and will use its best efforts to cause
such qualification and compliance to be effected (and be kept effective) as may
be so requested and as would permit or facilitate the sale and distribution of
such Securities Collateral including, without limitation, registration under the
Securities Act (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with all other requirements of any Governmental
Authority. Each Pledgor shall cause the Collateral Agent to be kept advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, shall furnish to the Collateral
Agent such number of prospectuses, offering circulars or other documents
incident thereto as the Collateral Agent from time to time may request, and
shall indemnify and shall cause the issuer of the Securities Collateral to
indemnify the Collateral Agent and all others participating in the distribution
of such Securities Collateral against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(iv) If the Collateral Agent determines to exercise its right
to sell any or all of the Securities Collateral, upon written request, the
applicable Pledgor shall from time to time furnish to the Collateral Agent all
such information as the Collateral Agent may request in order to determine the
number of securities included in the Securities Collateral which may be sold by
the Collateral Agent as exempt transactions under the Securities Act and the
rules of the Securities and Exchange Commission thereunder, as the same are from
time to time in effect.
- -45-
SECTION 10.5 No Waiver; Cumulative Remedies.
(i) No failure on the part of the Collateral Agent to
exercise, no course of dealing with respect to, and no delay on the part of the
Collateral Agent in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy; nor shall the
Collateral Agent be required to look first to, enforce or exhaust any other
security, collateral or guaranties. The remedies herein provided are cumulative
and are not exclusive of any remedies provided by law.
(ii) In the event that the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case, the Pledgors,
the Collateral Agent and each other Secured Party shall be restored to their
respective former positions and rights hereunder with respect to the Pledged
Collateral, and all rights, remedies and powers of the Collateral Agent and the
other Secured Parties shall continue as if no such proceeding had been
instituted.
SECTION 10.6 Certain Additional Actions Regarding Intellectual
Property. If any Event of Default shall have occurred, upon the written demand
of Collateral Agent, each Pledgor shall execute and deliver to Collateral Agent
an assignment or assignments of the registered Patents, Trademarks and/or
Copyrights and such other documents as are necessary or appropriate to carry out
the intent and purposes hereof. Within five Business Days of written notice
thereafter from Collateral Agent, each Pledgor shall make available to
Collateral Agent, to the extent within such Pledgor's power and authority, such
personnel in such Pledgor's employ on the date of the Event of Default as
Collateral Agent may reasonably designate to permit such Pledgor to continue,
directly or indirectly, to produce, advertise and sell the products and services
sold by such Pledgor under the registered Patents, Trademarks and/or Copyrights,
and such persons shall be available to perform their prior functions on
Collateral Agent's behalf.
ARTICLE XI
APPLICATION OF PROCEEDS
The proceeds received by the Collateral Agent in respect of
any sale of, collection from or other realization upon all or any part of the
Pledged Collateral pursuant to the exercise by the Collateral Agent of its
remedies as a secured creditor as provided in Article X hereof shall be applied,
together with any other sums then held by the Collateral Agent pursuant to this
Agreement, promptly by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses, fees,
commissions and taxes of such sale, collection or other realization
including, without limitation, compensation to the Collateral Agent
and its agents and counsel, and all expenses, liabilities and
advances made or in-
-46-
curred by the Collateral Agent in connection therewith, together with
interest on each such amount at the highest rate then in effect under
the Credit Agreement from and after the date such amount is due,
owing or unpaid until paid in full;
SECOND, to the payment of all other costs and expenses of such
sale, collection or other realization including, without limitation,
compensation to the Lenders and their agents and counsel and all
costs, liabilities and advances made or incurred by the Lenders in
connection therewith, together with interest on each such amount at
the highest rate then in effect under the Credit Agreement from and
after the date such amount is due, owing or unpaid until paid in
full;
THIRD, without duplication of amounts applied pursuant to
clauses FIRST and SECOND above, to the indefeasible payment in full
in cash, pro rata, of (i) interest, principal and other amounts
constituting Secured Obligations (other than the obligations arising
under the Swap Contracts and the RIH Secured Note) in accordance with
the terms of the Credit Agreement and (ii) the obligations arising
under the Swap Contracts in accordance with the terms of the Swap
Contracts; and
FOURTH, the balance, if any, to the Person lawfully entitled
thereto (including the Pledgors or their respective successors or
assigns).
In the event that any such proceeds are insufficient to pay in
full the items described in clauses FIRST through THIRD of this Article XI, the
Pledgors shall remain liable for any deficiency.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Concerning Collateral Agent.
(i) The Collateral Agent has been appointed as Collateral
Agent pursuant to the Credit Agreement. The actions of the Collateral Agent
hereunder are subject to the provisions of the Credit Agreement. The Collateral
Agent shall have the right hereunder to make demands, to give notices, to
exercise or refrain from exercising any rights, and to take or refrain from
taking action (including, without limitation, the release or substitution of the
Pledged Collateral), in accordance with this Agreement and the Credit Agreement.
The Collateral Agent may employ agents and attorneys-in-fact in connection
herewith and shall not be liable for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it in good faith. The Collateral Agent
may resign and a successor Collateral Agent may be appointed in the manner
provided in the Credit Agreement. Upon the acceptance of any appointment as the
Collateral Agent by a successor Collateral Agent, that successor Collateral
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent under this Agreement, and
the retiring Collateral
-47-
Agent shall thereupon be discharged from its duties and obligations under this
Agreement. After any retiring Collateral Agent's resignation, the provisions
hereof shall inure to its benefit as to any actions taken or omitted to be taken
by it under this Agreement while it was the Collateral Agent.
(ii) The Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if such Pledged Collateral is accorded treatment substantially
equivalent to that which the Collateral Agent, in its individual capacity,
accords its own property consisting of similar instruments or interests, it
being understood that neither the Collateral Agent nor any of the Secured
Parties shall have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Securities Collateral, whether or not the Collateral Agent or
any other Secured Party has or is deemed to have knowledge of such matters, or
(ii) taking any necessary steps to preserve rights against any Person with
respect to any Pledged Collateral.
(iii) The Collateral Agent shall be entitled to rely upon any
written notice, statement, certificate, order or other document or any telephone
message believed by it to be genuine and correct and to have been signed, sent
or made by the proper person, and, with respect to all matters pertaining to
this Agreement and its duties hereunder, upon advice of counsel selected by it.
(iv) If any item of Pledged Collateral also constitutes
collateral granted to Collateral Agent under any other deed of trust, mortgage,
security agreement, pledge or instrument of any type, in the event of any
conflict between the provisions hereof and the provisions of such other deed of
trust, mortgage, security agreement, pledge or instrument of any type in respect
of such collateral, Collateral Agent, in its sole discretion, shall select which
provision or provisions shall control.
SECTION 12.2 Collateral Agent May Perform; Collateral Agent
Appointed Attorney-in-Fact. If any Pledgor shall fail to perform any covenants
contained in this Agreement, (including, without limitation, such Pledgor's
covenants to (i) pay the premiums in respect of all required insurance policies
hereunder, (ii) pay Charges, (iii) make repairs, (iv) discharge Liens or (v) pay
or perform any obligations of such Pledgor under any Pledged Collateral) or if
any warranty on the part of any Pledgor contained herein shall be breached, the
Collateral Agent may (but shall not be obligated to) do the same or cause it to
be done or remedy any such breach, and may expend funds for such purpose;
provided, however, that Collateral Agent shall in no event be bound to inquire
into the validity of any tax, lien, imposition or other obligation which such
Pledgor fails to pay or perform as and when required hereby and which such
Pledgor does not contest in accordance in accordance with the provision of
Section 4.18 hereof. Any and all amounts so expended by the Collateral Agent
shall be paid by the Pledgors in accordance with the provisions of Section 12.3
hereof. Neither the provisions of this Section 12.2 nor any action taken by
Collateral Agent pursuant to the provisions of this Section 12.2 shall prevent
any such failure to observe any covenant contained in this Agreement nor any
breach of warranty form constituting an Event of Default. Each Pledgor hereby
appoints the Collateral Agent its attorney-in-fact (to the extent such action is
permitted by any applicable law, including, without limitation, Gaming Laws),
with full authority in the place and stead of such Pledgor and in the name of
such Pledgor, or otherwise, from time to time in the Collateral Agent's
discretion to take any action and to execute any instrument consistent with the
terms hereof and the other Credit
-48-
Documents which the Collateral Agent may deem necessary or advisable to
accomplish the purposes hereof. The foregoing grant of authority is a power of
attorney coupled with an interest and such appointment shall be irrevocable for
the term hereof. Each Pledgor hereby ratifies all that such attorney shall
lawfully do or cause to be done by virtue hereof.
SECTION 12.3 Expenses. Each Pledgor will upon demand pay to
the Collateral Agent the amount of any and all reasonable costs and expenses,
including the reasonable fees and expenses of its counsel and the reasonable
fees and expenses of any experts and agents which the Collateral Agent may incur
in connection with (i) any action, suit or other proceeding affecting the
Pledged Collateral or any part thereof commenced, in which action, suit or
proceeding the Collateral Agent is made a party or participates or in which the
right to use the Pledged Collateral or any part thereof is threatened, or in
which it becomes necessary in the judgment of the Collateral Agent to defend or
uphold the Lien hereof (including, without limitation, any action, suit or
proceeding to establish or uphold the compliance of the Pledged Collateral with
any requirements of any Governmental Authority or law), (ii) the collection of
the Secured Obligations, (iii) the enforcement and administration hereof, (iv)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (v) the exercise or enforcement
of any of the rights of the Collateral Agent or any Secured Party hereunder or
(vi) the failure by any Pledgor to perform or observe any of the provisions
hereof. All amounts expended by the Collateral Agent and payable by any Pledgor
under this Section 12.3 shall be due upon demand therefor (together with
interest thereon accruing at the Default Rate during the period from and
including the date on which such funds were so expended to the date of
repayment) and shall be part of the Secured Obligations. Each Pledgor's
obligations under this Section 12.3 shall survive the termination hereof and the
discharge of such Pledgor's other obligations under this Agreement, the Credit
Agreement, any Swap Contract and the other Credit Documents.
SECTION 12.4 Indemnity.
(i) Indemnity. Each Pledgor agrees to indemnify, pay and hold
harmless the Collateral Agent and each of the other Secured Parties and the
officers, directors, employees, agents and Affiliates of the Collateral Agent
and each of the other Secured Parties (collectively, the "Indemnitees") from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs (including, without limitation,
settlement costs), expenses or disbursements of any kind or nature whatsoever
(including, without limitation, the fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) which may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out hereof, any
Swap Contract or any other Credit Document (including, without limitation, any
misrepresentation by any Pledgor in this Agreement, any Swap Contract or any
other Credit Document) (the "Indemnified Liabilities"); provided, however, that
no Pledgor shall have any obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities if it has been determined by a final decision (after all
appeals and the expiration of time to appeal) of a court of competent
jurisdiction that such Indemnified Liabilities arose from the gross negligence
or willful misconduct of that Indemnitee. To the extent that the undertaking to
indemnify, pay and hold harmless set
-49-
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, each Pledgor shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
(ii) Survival. The obligations of the Pledgors contained in
this Section 12.4 shall survive the termination hereof and the discharge of the
Pledgors' other obligations under this Agreement, any Swap Contract and under
the other Credit Documents.
(iii) Reimbursement. Any amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement shall constitute Secured
Obligations secured by the Pledged Collateral.
SECTION 12.5 Continuing Security Interest; Assignment;
Replacement. This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) be binding upon the Pledgors, their respective
successors and assigns and (ii) inure, together with the rights and remedies of
the Collateral Agent hereunder, to the benefit of the Collateral Agent and the
other Secured Parties and each of their respective successors, transferees and
assigns. No other Persons (including, without limitation, any other creditor of
any Pledgor) shall have any interest herein or any right or benefit with respect
hereto. Without limiting the generality of the foregoing clause (ii), any Lender
may assign or otherwise transfer any indebtedness held by it secured by this
Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Lender, herein
or otherwise, subject however, to the provisions of the Credit Agreement (and
subject to any applicable Gaming Law including, but not limited to, the prior
approval of the assignment or transfer by the New Jersey Casino Control
Commission) and any applicable Swap Contract. Each Lender is subject to
replacement, if required under Gaming Laws, and in accordance with Section
2.11(b) of the Credit Agreement.
SECTION 12.6 Termination; Release. When all the Secured
Obligations have been paid in full and the Commitments of the Lenders to make
any Loan or to issue any Letter of Credit under the Credit Agreement shall have
expired or been sooner terminated, this Agreement shall terminate. Upon
termination hereof or any release of Pledged Collateral in accordance with the
provisions of the Credit Agreement, the Collateral Agent shall, upon the request
and at the sole cost and expense of the Pledgors, forthwith assign, transfer and
deliver to Pledgor, against receipt and without recourse to or warranty by the
Collateral Agent, such of the Pledged Collateral to be released (in the case of
a release) as may be in possession of the Collateral Agent and as shall not have
been sold or otherwise applied pursuant to the terms hereof, and, with respect
to any other Pledged Collateral, proper documents and instruments (including
UCC-3 termination statements or releases) acknowledging the termination hereof
or the release of such Pledged Collateral, as the case may be.
SECTION 12.7 Modification in Writing. No amendment,
modification, supplement, termination or waiver of or to any provision hereof,
nor consent to any departure by any Pledgor therefrom, shall be effective unless
the same shall be made in accordance with the terms of the Credit Agreement and
unless in writing and signed by the Collateral Agent. Any amendment,
modification
-50-
or supplement of or to any provision hereof, any waiver of any provision hereof
and any consent to any departure by any Pledgor from the terms of any provision
hereof shall be effective only in the specific instance and for the specific
purpose for which made or given. Except where notice is specifically required by
this Agreement or any other Credit Document, no notice to or demand on any
Pledgor in any case shall entitle any Pledgor to any other or further notice or
demand in similar or other circumstances.
SECTION 12.8 Notices. All notices, requests and other
communications provided for herein (including any modifications of, or waivers,
requests or consents under, this Agreement) shall be given or made in writing
(including by facsimile) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof (or any
Guarantor, as so specified for Borrower) or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by facsimile or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
SECTION 12.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS EXCEPT TO
THE GREATEST EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR ITEM OR TYPE OF
PLEDGED COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK.
SECTION 12.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS;
WAIVER OF JURY TRIAL. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PLEDGOR WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF
NEW YORK SITTING IN NEW YORK COUNTY, THE COURTS OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS OF ANY THEREOF, AND
BY EXECUTION AND DELIVERY HEREOF, EACH PLEDGOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH PLEDGOR AGREES
THAT SERVICE OF PROCESS IN ANY PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF
MAIL), POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH IN THE CREDIT
AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE COLLATERAL AGENT SHALL HAVE BEEN
NOTIFIED PURSUANT THERETO. IF ANY AGENT APPOINTED BY ANY PLEDGOR REFUSES TO
ACCEPT SERVICE, SUCH PLEDGOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST ANY PLEDGOR IN THE COURTS OF
-51-
ANY OTHER JURISDICTION. THE PLEDGORS HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12.11 Severability of Provisions. Any provision hereof
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 12.12 Execution in Counterparts. This Agreement and
any amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
SECTION 12.13 Limitation on Interest Payable. It is the
intention of the parties to conform strictly to the usury laws, whether state or
Federal, that are applicable to the transaction of which this Agreement is a
part. All agreements between the Pledgors and the Collateral Agent whether now
existing or hereafter arising and whether oral or written, are hereby expressly
limited so that in no contingency or event whatsoever shall the amount paid or
agreed to be paid by the Pledgors for the use, forbearance or detention of the
money to be loaned under the Credit Agreement ,any Swap Contract, or any other
Credit Document, or for the payment or performance of any covenant or obligation
contained herein or in the Credit Agreement, any Swap Contract, or any other
Credit Document, exceed the maximum amount permissible under applicable Federal
or state usury laws. If under any circumstances whatsoever fulfillment of any
such provision, at the time performance of such provision shall be due, shall
involve exceeding the limit of validity prescribed by law, then the obligation
to be fulfilled shall be reduced to the limit of such validity. If under any
circumstances the Pledgors shall have paid an amount deemed interest by
applicable law, which would exceed the highest lawful rate, such amount that
would be excessive interest under applicable usury laws shall be applied to the
reduction of the principal amount owing in respect of the Secured Obligations
and not to the payment of interest, or if such excessive interest exceeds the
unpaid balance of principal and any other amounts due hereunder, the excess
shall be refunded to the Pledgors. All sums paid or agreed to be paid for the
use, forbearance or detention of the principal under any extension of credit by
the Collateral Agent shall, to the extent permitted by applicable law, and to
the extent necessary to preclude exceeding the limit of validity prescribed by
law, be amortized, prorated, allocated and spread from the date hereof until
payment in full of the Secured Obligations so that the actual rate of interest
on account of such principal amounts is uniform throughout the term hereof.
SECTION 12.14 Business Days. In the event any time period or
any date provided in this Agreement ends or falls on a day other than a Business
Day, then such time period shall be deemed to end and such date shall be deemed
to fall on the next succeeding Business Day, and performance herein may be made
on such Business Day, with the same force and effect as if made on such other
day.
-52-
SECTION 12.15 Relationship. The relationship of Collateral
Agent to each of the Pledgors hereunder is strictly and solely that of pledgor
and secured party and nothing contained in the Credit Agreement, this Agreement,
any Swap Contract or any other document or instrument now existing and delivered
in connection therewith or otherwise in connection with the Secured Obligations
is intended to create, or shall in any event or under any circumstance be
construed as creating a partnership, joint venture, tenancy-in-common, joint
tenancy or other relationship of any nature whatsoever between Collateral Agent
and each of the Pledgors other than as pledgor and secured party.
SECTION 12.16 Reserved.
SECTION 12.17 No Credit for Payment of Taxes or Imposition.
Such Pledgor shall not be entitled to any credit against the principal, premium,
if any, or interest payable under the Credit Agreement, and such Pledgor shall
not be entitled to any credit against any other sums which may become payable
under the terms thereof or hereof, by reason of the payment of any Tax on the
Pledged Collateral or any part thereof.
SECTION 12.18 No Claims Against Collateral Agent. Nothing
contained in this Agreement shall constitute any consent or request by the
Collateral Agent, express or implied, for the performance of any labor or
services or the furnishing of any materials or other property in respect of the
Pledged Collateral or any part thereof, nor as giving any Pledgor any right,
power or authority to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against the Collateral Agent in respect
thereof or any claim that any Lien based on the performance of such labor or
services or the furnishing of any such materials or other property is prior to
the Lien hereof.
SECTION 12.19 Obligations Absolute. All obligations of each
Pledgor hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Pledgor or
any other Credit Party;
(ii) any lack of validity or enforceability of the Credit
Agreement, any Swap Contract, any Letter of Credit or any other
Credit Document, or any other agreement or instrument relating
thereto;
(iii) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Secured Obligations, or
any other amendment or waiver of or any consent to any departure from
the Credit Agreement, any Swap Contract, any Letter of Credit or any
other Credit Document, or any other agreement or instrument relating
thereto;
(iv) any pledge, exchange, release or non-perfection of any
other collateral, or any release or amendment or waiver of or consent
to any departure from any guarantee, for all or any of the Secured
Obligations;
-53-
(v) any exercise, non-exercise or waiver of any right, remedy,
power or privilege under or in respect hereof, any Swap Contract or
any other Credit Document except as specifically set forth in a
waiver granted pursuant to the provisions of Section 12.7 hereof; or
(vi) any other circumstances which might otherwise constitute
a defense available to, or a discharge of, any Pledgor.
ARTICLE XIII
COLLATERAL AGENCY
SECTION 13.1 Declaration and Acceptance of Trust. The
Collateral Agent hereby declares, and the Borrower, the other Pledgors and the
Lenders' Collateral Agent agree, that the Collateral Agent holds the Pledged
Collateral as trustee in trust under this Agreement for the equal and ratable
benefit of the Secured Parties as provided herein. By acceptance of the benefits
of this Agreement each Secured Party and each Person for whom such Secured Party
acts as trustee, agent or fiduciary, as applicable, (i) consents to the
appointment of Bankers Trust Company, as collateral agent (the "Collateral
Agent") hereunder and grants the Collateral Agent all rights and powers
necessary for the Collateral Agent to perform its obligations hereunder, (ii)
confirms that the Collateral Agent shall have the authority to act as the
exclusive agent of such Secured Party to make claims under and enforce all
remedies under or with respect to this Agreement and the giving or withholding
of any consent or approval relating to the Pledged Collateral or any obligations
with respect thereto or otherwise take any action on behalf of the Secured
Parties contemplated in this Agreement, (iii) agrees that except as provided in
this Article XIII, such Secured Party shall not take any actions to enforce any
of such remedies or give any such consents or approvals relating to any Pledged
Collateral or this Agreement and (iv) agrees that such Secured Party shall not
bring any suit, action or proceeding to enforce such Secured Party's Debt
Instrument or any interest therein (including any individual bond, note or
similar instrument comprising a portion of a Debt Instrument) if doing so could,
under the laws of any applicable jurisdiction, cause to be applicable any "one"
action rule" or other law or defense which could adversely affect any Secured
Party's rights and remedies in respect of the Pledged Collateral.
SECTION 13.2 Remedies. (a) Upon the receipt of an Enforcement
Notice by the Collateral Agent, the Collateral Agent shall, within three
Business Days thereafter, notify each Secured Party in writing that the
Collateral Agent has received such Enforcement Notice, enclosing a copy of such
Enforcement Notice. An Enforcement Notice shall be deemed to be in effect
hereunder only if such Notice shall have been given and not rescinded, annulled
or withdrawn in writing by the applicable Secured Party.
(b) Upon the occurrence and during the continuance of an Event
of Default in respect of any Debt Instrument, the Lenders' Collateral Agent
shall have the right to direct at any time in one
-54-
or more writings (which shall specify that an Event of Default has occurred and
is continuing and shall state the nature thereof) (each such writing, an
"Enforcement Notice") addressed to the Collateral Agent that any right or remedy
available to the Collateral Agent or the Secured Parties with respect to the
Pledged Collateral be exercised by the Collateral Agent on behalf of all Secured
Parties. Following receipt of any Enforcement Notice, the Collateral Agent
shall, subject to the provisions hereof relating to indemnification of the
Collateral Agent, take the actions directed therein and any other actions which
it deems proper and which are not inconsistent with such direction.
SECTION 13.3 Determinations Relating to Collateral. Prior to
the occurrence and continuance of an Event of Default and receipt of an
Enforcement Notice from Lenders' Collateral Agent any Secured Party, in the
event (i) the Collateral Agent shall receive any written request from any
Pledgors under this Agreement for consent or approval with respect to any matter
or thing relating to any Pledged Collateral or such Pledgor's obligations with
respect thereto and which matter or thing is, under the terms of this Agreement,
of a nature such that the Collateral Agent shall not be entitled to respond
thereto or determines not to respond thereto or (ii) there shall be due to or
from the Collateral Agent under the provisions of this Agreement any material
performance or the delivery of any material instrument or (iii) the Collateral
Agent shall become aware of any nonperformance by any Pledgor of any covenant or
any breach of any representations or warranty of such Pledgor set forth in this
Agreement, then, in each such event, the Collateral Agent shall, within three
Business Days, advise all Secured Parties in writing of the matter or thing as
to which consent has been requested or the performance or instrument required to
be delivered or the non-performance or breach of which the Collateral Agent has
become aware. The Lenders' Collateral Agent shall have the exclusive authority
to direct the Collateral Agent's response to any of the circumstances
contemplated in clauses (i), (ii) and (iii) above. Subject to each Pledgor's
rights and obligations under the provisions of Section 4.17 of this Agreement,
the Lenders' Collateral Agent shall have the sole authority to direct the
conduct of the Collateral Agent with respect to any disposition of a Net
Condemnation Award or Net Insurance Proceeds. In the event the Collateral Agent
shall be required to respond to any of the circumstances contemplated in this
Section 13.3, the Collateral Agent shall be entitled, at the sole cost and
expense of the Borrower, to hire experts, consultants, agents and attorneys to
advise the Collateral Agent on the manner in which the Collateral Agent shall
respond thereto. The Collateral Agent shall be fully protected in the taking of
any action recommended or approved by any such expert, consultant, agent or
attorney or agreed to by the Lenders' Collateral Agent pursuant hereto.
SECTION 13.4 Nature of Secured Parties' Rights. All of the
Secured Parties shall be bound by any instruction or direction given by the
Lenders' Collateral Agent pursuant to this Agreement to the extent any such
instruction or direction is within the powers or rights granted to Lenders'
Collateral agent under the Credit Agreement.
SECTION 13.5 Acceptance of Trust. The Collateral Agent, for
itself and its successors, hereby accepts the trust created by this Agreement
upon the terms and conditions hereof, including those contained in this Article
XIII. The Collateral Agent's duties in respect of the Pledged Collateral shall
include, without limitation, the review of applications of the Pledgors or
others for consents, waivers, releases or other matters relating to the Pledged
Collateral and the prosecution following any Event of Default of any action or
proceeding or the taking of any nonjudicial remedial
-55-
action as shall be determined to be required pursuant to the provisions of
Sections 13.2 and 13.3 hereof.
SECTION 13.6 Exculpatory Provisions. (a) The Collateral Agent
shall not be responsible in any manner whatsoever for the correctness of any
recitals, statements, representations or warranties herein contained, all of
which are made solely by each Pledgor. The Collateral Agent makes no
representations as to the value or condition of the Pledged Collateral or any
part thereof, or as to the title of each Pledgor thereto or as to the security
afforded by this Agreement or as to the validity, execution (except its own
execution thereof), enforceability, legality or sufficiency of this Agreement or
of the Secured Obligations, and the Collateral Agent shall incur no liability or
responsibility in respect of any such matters. The Collateral Agent shall not be
responsible for insuring the Pledged Collateral or for the payment of taxes,
charges, assessments or Liens upon the Pledged Collateral.
(b) The Collateral Agent shall not be required to ascertain or
inquire as to the performance by the Pledgors of any of the covenants or
agreements contained herein, or in any Debt Instrument. Whenever it is
necessary, or in the opinion of the Collateral Agent advisable, for the
Collateral Agent to ascertain the amount of Secured Obligations then held by a
Secured Party, the Collateral Agent may rely on a certificate as to such amount
from any trustee, agent or fiduciary constituting or representing such Secured
Party and if any such Secured Party shall not provide such information to the
Collateral Agent, such Secured Party shall not be entitled to receive payments
hereunder (in which case the amounts otherwise payable to such Secured Party
shall be held in trust for such Secured Party in the Collateral Account) until
such Secured Party has provided such information to the Collateral Agent.
(c) The Collateral Agent shall not be personally liable for
any action taken or omitted to be taken by it in accordance with this Agreement
or any Debt Instrument except for its own gross negligence or willful
misconduct.
SECTION 13.7 Delegation of Duties. The Collateral Agent may
execute any of the trusts or powers hereof and perform any duty hereunder either
directly or by or through agents or attorneys-in-fact. The Collateral Agent
shall be entitled to advice of counsel concerning all matters pertaining to such
trusts, powers and duties. The Collateral Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it
without gross negligence or willful misconduct in the employment of such agents
or attorneys-in-fact.
SECTION 13.8 Reliance by the Collateral Agent. (a) The
Collateral Agent may consult with counsel, and any opinion of such counsel (who
shall not be employees of any Pledgor) shall be full and complete authorization
and protection in respect of any action taken or suffered by it hereunder in
accordance therewith. The Collateral Agent shall have the right at any time to
seek instructions concerning the administration of the Pledged Collateral from
any court of competent jurisdiction.
-56-
(b) The Collateral Agent may rely, and shall be fully
protected in acting, upon any Enforcement Notice, resolution, statement,
certificate, instrument, opinion, direction, instruction, report, notice,
request, consent, order, bond or other paper or document as to which it has no
reason to believe to be other than genuine and to have been signed or presented
by the proper party or parties or, in the case of cables, telecopies and
telexes, to have been sent by the proper party or parties. In the absence of its
gross negligence or willful misconduct, the Collateral Agent may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Collateral
Agent and conforming to the requirements of this Agreement.
(c) The Collateral Agent shall not be under any obligation to
exercise any of the rights or powers vested in the Collateral Agent by this
Agreement unless the Collateral Agent shall have been provided adequate security
and indemnity against the costs, expenses and liabilities that may be incurred
by it in compliance with such request or direction, including, without
limitation, such reasonable advances as may be requested by the Collateral
Agent.
SECTION 13.9 Resignation or Removal of the Collateral Agent.
(a) The Collateral Agent may at any time, (i) by giving written notice to the
Secured Parties, resign and be discharged of the responsibilities hereby
created, such resignation to become effective upon the appointment of a
successor collateral agent or collateral agents by the Lenders' Collateral Agent
or (ii) be removed from its capacity as the Collateral Agent by the Lenders'
Collateral Agent. If no successor collateral agent or collateral agents shall be
appointed and approved within sixty days from the date of the giving of the
aforesaid notice of resignation or within sixty days from the date of such
removal, the Collateral Agent (notwithstanding the termination of all of its
other duties and obligations hereunder by reason of such resignation or such
removal) shall apply to any court of competent jurisdiction to appoint a
successor collateral agent or collateral agents (which may be an individual or
individuals) to act hereunder. Any successor collateral agent or collateral
agents so appointed by such court shall immediately and without further act be
superseded by any successor collateral agent or collateral agents appointed by
the Lenders' Collateral Agent.
(b) If at any time the Collateral Agent shall resign or
otherwise become incapable of acting, or if at any time a vacancy shall occur in
the office of the Collateral Agent by virtue of the removal of the Collateral
Agent or for any other cause, a successor collateral agent or collateral agents
may be appointed by the Lenders' Collateral Agent, and the powers, duties,
authority and title of the predecessor collateral agent or collateral agents
shall be terminated and canceled without procuring the resignation of such
predecessor collateral agent or collateral agents, and without any other
formality (except as may be required by applicable law).
(c) The appointment and designation referred to in subsection
13.9(b) shall, after any required filing, be full evidence of the right and
authority to make the same and of all the facts therein recited, and this
Agreement shall vest in such successor collateral agent or collateral agents,
without any further act, deed or conveyance, all of the estate and title of its
predecessor or their predecessors, and upon such filing for record the successor
collateral agent or collateral agents shall become fully vested with all the
estates, properties, rights, powers, trusts, duties, authority and title of
-57-
its predecessor or their predecessors; but such predecessor or predecessors
shall, nevertheless on the written request of the Lenders' Collateral Agent, any
Pledgor or its or their successor collateral agent or collateral agents, execute
and deliver an instrument transferring to such successor or successors all the
estates, properties, rights, powers, trusts, duties, authority and title of such
predecessor or predecessors hereunder. Each such predecessor or predecessors
shall deliver all securities and moneys held by it or them to such successor
collateral agent or collateral agents
(d) Any required filing for record of the instrument
appointing a successor collateral agent or collateral agents as hereinabove
provided shall be at the expense of the Borrower. The resignation of any
collateral agent or collateral agents and the instrument or instruments removing
any collateral agent or collateral agents, together with all other instruments,
deeds and conveyances provided for in this Article XIII shall be forthwith
recorded, registered and filed by and at the expense of the Borrower, wherever
this Agreement is recorded, registered and filed.
SECTION 13.10 Merger of the Collateral Agent. Any corporation
into which the Collateral Agent may be merged, or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Collateral Agent shall be a party, shall be the Collateral Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of the parties hereto.
SECTION 13.11 Appointment of Additional and Separate
Collateral Agent. Whenever (i) the Collateral Agent shall deem it necessary or
prudent (in accordance with the advice or opinion of its counsel) in order to
conform to any law of any jurisdiction in which all or any part of the Pledged
Collateral shall be situated or to make any claim or bring any suit with respect
to or in connection with the Pledged Collateral, or (ii) the Collateral Agent
shall be advised by counsel satisfactory to it that it is so necessary or
prudent in the interest of the Secured Parties, then in any such case, the
Collateral Agent shall execute and deliver from time to time all instruments and
agreements necessary or proper to constitute another bank or trust company or
one or more persons approved by the Collateral Agent, and meeting any Gaming Law
requirements, either to act as additional trustee or trustees of all or any part
of the Pledged Collateral, jointly with the Collateral Agent, or to act as
separate trustee or trustees of all or any part of the Pledged Collateral, in
any such case with such powers as may be provided in such instruments or
agreements and to vest in such bank, trust company or person as such additional
trustee or separate trustee, as the case may be, any property, title, right or
power of the Collateral Agent deemed necessary or advisable by the Collateral
Agent. The provisions of the foregoing sentence shall at all times be subject to
any restrictions imposed by any applicable law, including, without limitation,
Gaming Laws. Each Pledgor and the Secured Parties hereby consent to all actions
taken by the Collateral Agent under the foregoing provisions of this Section
13.11.
SECTION 13.12 Releases of Collateral. So long as no Event of
Default is continuing and no Enforcement Notice is in effect, in each case where
this Agreement or any Credit Document permits any Pledgor to obtain a release of
Pledged Collateral upon compliance with the provisions set forth therein, the
Collateral Agent shall upon receipt of evidence from such Pledgor of such
compliance, and subject to the next sentence, release from the Lien of this
Agreement such Pledged Collateral (it being expressly understood that this
sentence of this Section 13.12 shall not be construed as in
-58-
any way limiting, amending, supplementing or waiving any of the procedures to be
followed under this Agreement or the Credit Documents or any of the conditions
precedent to be satisfied thereunder). In each case where any Credit Document
specifically permits a Pledgor to obtain a release of Pledged Collateral upon
compliance with the provisions set forth therein, the Collateral Agent shall,
upon receipt of a written direction from Lenders' Collateral Agent confirming
that such proposed release complies with the provisions of the Credit Documents,
release such Pledged Collateral from the Lien of this Agreement. In the event
that neither the Credit Documents nor this Agreement specifically contemplates
such Pledgor's right to obtain a particular release of Pledged Collateral which
shall be requested by such Pledgor, and so long as no Event of Default is
continuing and no Enforcement Notice is in effect, the Lien of this Agreement
shall be released in whole or in part by the Collateral Agent acting solely at
the direction and with the consent of the Lenders' Collateral Agent. The
Lenders' Collateral Agent shall have the exclusive authority to direct the
Collateral Agent to amend, supplement or waive any provision of this Agreement,
in each case without any consent or approval, or prior notice, to any other
Secured Party.
IN WITNESS WHEREOF, the Pledgors and the Collateral Agent have
caused this Agreement to be duly executed and delivered by their duly authorized
officers as of the date first above written.
COLONY RIH ACQUISITIONS, INC.,
as Borrower and a Pledgor
By: /s/ Nicholas L. Ribis
----------------------------------------
Name: Nicholas L. Ribis
Title: Secretary
Address for Notices: Resorts International Hotel, Inc.
1133 Boardwalk
Atlantic City, NJ 08401
Contact person: Joseph D'Amato
Telecopier No.: (609)340-7896
Telephone No.: (609)340-6547
RESORTS INTERNATIONAL HOTEL, INC.,
as a Guarantor and a Pledgor
By: /s/ Joseph D'Amato
----------------------------------------
Name: Joseph D'Amato
Title: Vice President
NEW PIER OPERATING COMPANY, INC.,
as a Guarantor and a Pledgor
By: /s/ Joseph D'Amato
----------------------------------------
Name: Joseph D'Amato
Title: Vice President
COLONY RIH HOLDINGS, INC.,
as a Guarantor and a Pledgor
By: /s/ Nicholas L. Ribis
----------------------------------------
Name: Nicholas L. Ribis
Title: Secretary
BANKERS TRUST COMPANY,
as Collateral Agent
By: /s/ Gregory Maragni
----------------------------------------
Name: Gregory Maragni
Title: Director
Address for Notices: 130 Liberty Street
New York, NY 10006
Contact person: Gregory Maragni
Telecopier No.: (212) 250-4398
Telephone No.: (212) 669-0143
BANKERS TRUST COMPANY,
as Lenders' Collateral Agent
By: /s/ Gregory Maragni
----------------------------------------
Name: Gregory Maragni
Title: Director
Address for Notices: 130 Liberty Street
New York, NY 10006
Contact person: Gregory Maragni
Telecopier No.: (212) 250-4398
Telephone No.: (212) 669-0143